Three sources of money
You. If you're an employee, your contribution is a percentage of your gross pay: 3.5%, 4%, 6%, 8%, 10%, with 3.5% as the default. You can also pay extra straight to your provider or to Inland Revenue.
Your employer. Employers must add at least 3.5% of your gross pay on top of your wages while you contribute. That contribution is taxed before it reaches your account, through employer superannuation contribution tax (ESCT). The ESCT rate depends on your pay plus the employer's contributions, using these bands: up to $18,720 10.5%; up to $64,200 17.5%; up to $93,720 30%; up to $216,000 33%; above that 39%.
The government. Each year from 1 July to 30 June, the government adds 25 cents for every dollar you contribute, up to $260.72. To get the maximum you need to put in $1,042.86 of your own money in that year; employer contributions don't count towards it. You need to be aged 16 to 65 with taxable income of $180,000 or less, among other conditions, and your provider claims it for you after 30 June.
Worked example
On an invented salary of $55,000.00 at the default rate, you put in $1,925.00 a year. Your employer pays $1,925.00, and after ESCT at 17.5% $1,588.13 reaches your account. Your own contributions are well over $1,042.86, so the government adds the full $260.72. In total, $3,773.85 goes in over the year. On $20,000.00 a year, you'd put in $700.00 and the government would add $175.00.
To show how assumptions change the picture: starting from $10,000.00 and adding $3,773.85 a year for 20 years, an assumed return of 4% after tax and fees ends at $134,289.22, while a return of zero ends at $85,477.00. Neither figure is a prediction. Returns go up and down, and pay usually changes over time.
Mistakes to avoid
- Counting your employer's contribution twice. Payslips often show the gross employer amount. What reaches your account is less, after ESCT.
- Missing the government contribution by a little. If your own contributions fall just short of $1,042.86 by 30 June, a voluntary top-up before the deadline gets you the full amount.
- Treating a projection as a promise. Projections depend completely on the return you assume. Try a few, including low ones.
- Ignoring fees. A fee taken as a percentage of your balance grows with your balance. Over decades, a small difference in fees makes a large difference to the result.
Limits
The calculator assumes your salary, rates and contributions stay the same every year and that contributions arrive once a year. It doesn't model inflation, pay rises, contribution holidays, temporary rate reductions, first-home withdrawals or the tax rate your fund pays on returns, so enter a return that is already after tax and fees if you use the fee fields as zero. For your own situation, talk to your KiwiSaver provider or a licensed financial adviser. What you type stays in your browser. To see your pay after KiwiSaver, use the take-home pay calculator.
Questions people ask
How much do I need to put in to get the full government contribution?
$1,042.86 of your own money between 1 July and 30 June, which earns the maximum $260.72. Below that, you get 25 cents per dollar.
Why does my employer's contribution look smaller in my account?
Employer contributions are taxed through employer superannuation contribution tax (ESCT) before they're paid into your account. The calculator shows the amount before and after ESCT.
What return should I use for the projection?
There's no right answer, which is why the calculator doesn't fill one in. Returns depend on your fund type and on markets, and past returns don't predict future ones. Try several, including low ones, to see the range.
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