Kids can join KiwiSaver too
With no minimum age to join, the savings incentives attached to KiwiSaver made it a great way to put aside money for your kids’ future. The future will be locked in until age but some amounts can be accessed earlier in certain circumstances, such as buying a first home. They’ll need an IRD number before joining-you can apply for one using an IR546 form from Inland Revenue.
An early start works wonders
(and $1000 for joining doesn’t hurt either)
KiwiSaver members under 18 can still receive the $1000 kick start to savings provided by the government. They’ll also receive the subsidy towards scheme fees of $40 per year. Once they turn 18 they’ll be eligible for tax credits matching contributions made to their account, up to $20.00 per week.
Starting early, compound interest and regular savings can do more than you think. The table shows how an account balance could grow with different contribution amounts.
Years | No Contributions | $20/month | $40/month |
5 | 1,338 | 2,728 | 4,118 |
10 | 1,791 | 5,040 | 8,290 |
15 | 2,397 | 8,135 | 13,873 |
20 | 3,207 | 12,276 | 21,345 |
Assumes savings earn 6%p.a. net of fees and tax.
What happens if they take on a job? As a KiwiSaver member, unless your child is on a contribution holiday they’ll have to notify their employer to deduct KiwiSaver contributions from their wages, at a minimum rate of 4%. Under the current rules it’s possible to apply for a contribution holiday after being a KiwiSaver member for 12 months. |
What contributions are required?
For those not receiving a salary or wages there is no minimum ongoing contribution level to KiwiSaver and no initial contribution is required. You can choose the contribution amounts and how frequently they are made.
How are contributions made?
Contributions can be made via IRD using one of three methods:
1. Using the “Pay tax” option on your banks internet banking facility
2. Paying over the counter at a Westpac branch
3. Sending a cheque to Inland Revenue
Each of these methods allows relatives such as parents or grandparents to make contributions to a child’s KiwiSaver account.