Not sure if you can still afford KiwiSaver?

The $1000 government kick start, annual tax credits and employer contributions make KiwiSaver an attractive long-term savings option. But if you find it difficult to keep up your own contributions, you have several options:

Have you been a member for 12 months or more?

If you’re an employee, you can put your KiwiSaver payments on hold for between three months and five years. This is called taking a ‘contributions holiday’.

You can renew a contributions holiday at any time, and there's no limit to the number of times you can take one. You can also stop your contributions holiday at any time and re-start your KiwiSaver contributions.

Your employer is not required to pay compulsory employer contributions if you are taking a contributions holiday. However, if they choose, they can continue to make employer contributions and claim their employer tax credit (up to $1040 a year).

More information, including how to apply for a contributions holiday, is on the Inland Revenue KiwiSaver website.

Have you been a member for less than 12 months?

If you suffer, or are likely to suffer, financial hardship before you have been in KiwiSaver for 12 months, you may be eligible for an early contributions holiday. This is usually for three months (unless Inland Revenue agrees to a longer period). Financial hardship is defined on the Inland Revenue KiwiSaver website.

Are you able to afford some contribution through the year?

A contributions holiday gives you a break from making regular payments through your salary.  But you will still be able to make voluntary contributions or lump sum payments at any time - either direct to Inland Revenue, or direct to your provider.

And if your contributions total $1042 for the year, you will still benefit from the maximum annual tax credit.

Are you self-employed or not working?

If you're self-employed or not working, you will need to talk to your scheme provider to negotiate a savings break or reduce the amount of your contributions.

Would you rather pay off your mortgage?

After paying in for 12 months you can divert up to half of your KiwiSaver contributions to mortgage payments on the home that you live in (not an investment property). That’s if both your scheme provider and mortgage lender offer this option. You can find out more on the Inland Revenue KiwiSaver website, or by talking with your provider.

Are you able to afford 2%?

If your employer agrees, up until March 2010 your contribution can be made up of 2% from your gross pay and a 2% contribution from your employer.