Financial Success Group | Kiwisaver changes and what they’ll mean for you
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Kiwisaver changes and what they’ll mean for you

20 Mar Kiwisaver changes and what they’ll mean for you

Well, it feels like the official end of Summer now as we farewell the longer days and put our clocks back at the end of this month to pre-daylight saving time. With this also comes another change though.

As of April 1, the 2nd 2011 budget change will mean that your employer’s contributions into Kiwisaver are subject to Employer Superannuation Contribution Tax (ESCT). That sounds complicated, but put simply it means that there will be slightly less $$ going into your Kiwisaver account as your Employer’s contributions are taxed at your normal, marginal tax rate.
Before we get too indignant that the government have found another way to siphon off a wee bit to their own pockets, let’s look at the numbers…

If you are on a salary of $52,000 per annum, you will still contribute $1,040pa or $20 per week to your Kiwisaver account, as you are now. What will change is that your employer will now contribute only $858pa (or $16.50 per week), pay the balance of $182 over the year to the IRD.

The other change that came in to affect from 1 July 2011 was the Member Tax Credit was halved from $1 to 50c for every $1 you contribute, up to a maximum of $20 per week. The Member Tax credit amount will depend on your total contributions over the 12 months (1 of July to 30 June) but cuts off at a maximum of $521 per annum.

While the changes are unfortunate, as the government looks to reduce its debt, we still believe that Kiwisaver is a worthwhile way to save a little golden nest egg, as you are still receiving contributions from other parties (your employer and the government). Further to this, it is a relatively low-cost scheme compared to other retirement plans.

I believe the changes to be minor in the overall scheme of your investment planning and it is important to continue saving towards achieving your retirement goals. However, if your circumstances have changed or you would like to discuss these changes in further detail, don’t hesitate to contact me on 09 921 7650 or via

This information is of a general nature and is not deemed a ‘Personalised Advice Service’ as defined by the Financial Adviser Act (FAA) 2008.