Written by R.. A. Stewart
The Kiwisaver announcements made in New Zealand’s budget on 22 May, 2025 should not affect the retirement plans of the average kiwi.
Prior to the budget, a TV presenter said, “Kiwisaver will be means tested,” without actually giving any details; how are viewers supposed to interpret that statement?
All was revealed on budget day when it was announced that those who have an income of over 180k are no longer entitled to the government incentive. That is fair enough. They hardly need the money!
The second announcement was that the $520 annual kiwisaver incentive was reduced to $260. To receive this amount $1,040 must be deposited into your kiwisaver each year.
Doing the mathematics, this means that you will receive 25% of what you deposit into your kiwisaver for that year. The key is to deposit a minimum of $1,040 into your kiwisaver every year.
The employer contribution to your Kiwisaver will be raised to 4% of your gross wages.
Some folk might be asking whether it is worthwhile depositing money into kiwisaver due to the reduction in the government incentives.
If the sole reason why you are in kiwisaver is for the government freebies then you are in kiwisaver for the wrong reason. The right reason for joining and contributing to kiwisaver is to save up for your retirement. This will make life easier once you stop working.
It is just a matter of asking yourself, “Will my future self thank me for doing this?”
There will be no one who reaches the age of 65 and then regrets that they contributed to kiwisaver all of their life. The same thing applies to you if you are from a country other than New Zealand. Your retirement scheme will have its own rules, so familiarise yourself with them.
Another Kiwisaver change is that 16 and 17 year olds will be eligible for the $260 Kiwisaver incentive. Previously, the minimum age was 18. The media misreported this saying, “16 and 17 year olds are now eligible for Kiwisaver.”
The truth is that they have always been eligible for Kiwisaver, but previously were not eligible for the government money which is now $260. Those under 16 can still join Kiwisaver.
To summarise, joining a retirement savings scheme is a mature and responsible thing to do. It is sowing seeds for your future provision which will make life less stressful as far as your future finances are concerned.
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