 Some of the clients that I meet with have the view that with the $1,000 government kickstart disappearing a few years back, it no longer makes sense for their children to be enrolled with a KiwiSaver provider. Bear in mind, if your children are over 18 then they are entitled to the member tax credit. What is that I hear you say? Well for every $1.00 that you contribute to your KiwiSaver in a 12 month period, the government will contribute $0.50 (up to a cap of $520). So if your child contributes $1040 to their fund, the government will contribute $520. A 50% return on your money. Not bad! Everyone has the option to contribute 3,4 or 8% of their gross salary and this is paid via your employer to your nominated KS provider. So if your children are at university or secondary school and working in a part-time capacity and on minimum wage, they may not contribute $1,040 over a 12 month period and therefore not get the full $520 from the government BUT they will still get $0.50 for every $1.00 contributed. |
| My son, for example, had contributed $700 so he would have been entitled to $350. Given we had some spare money, our choice was to top up his KiwiSaver balance to the $1040 so that he would receive the maximum he was entitled to. If your child has not purchased their first home, they will be able to get this money out to put towards their deposit on their first home. They can withdraw all funds, with the exception of $1,000. The other argument for getting your kids into KiwiSaver is that they see the benefits of contributing a little and often. The concept of saving is pretty easy to identify with when all of a sudden you have a $5,000 balance! They also experience first-hand, that this minimal contribution was not painful – once it is set up, they don’t even notice the minimal sum of 3% going from their gross savings. |