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"I do not earn PAYE income - can I join KiwiSaver?"

Yes. Non-PAYE income earning people can join KiwiSaver. And, because you don’t earn PAYE income, you save only what you decide. The 2% minimum rule for employees does not apply.

When a person under age 65 first joins, the government pays the $1,000 kick-start. This is not dependent on saving anything.

If the member is 18 or older and under the Retirement Age and does save, the government also pays $1 for $2 up to $521.43 a year. This is also known as a “member tax credit”. There is no requirement to save $1,042.86 - you can save more (or less) but you do not receive any additional government tax credits if you save more.

The amount of your savings is subject to any minimum of the KiwiSaver scheme provider you choose, but otherwise it is up to you. SuperLife has no minimum contribution.

Capturing the $1,000 kick-start

A self-employed person should join as soon as possible to qualify for the government’s $1,000 kick-start. By joining, you get $1,000. You do not need to save anything when you become an employee, if you have been in KiwiSaver for at least 1 year.

Capturing the $521.43 annual MTC (member tax credit)

Having joined, if you can afford to save, you should save the equivalent of $87 a month (i.e. $20 a week, $1,042.86 a year). This maximises the government’s MTC tax credit. Whether you save at the level of $87 a month, or simply pay a single cheque in June each year for the full amount, depends on your preference, your cash flow and what is convenient.

In the first year of membership, you should only save $87 times the number of months you have been a member. The full $521.43 tax credit is not paid by the government in your first year unless you joined on 1 July.

You can save more than $1,042.86 a year but must remember that (unless you are intending to buy your first home) your money is locked in until the New Zealand Superannuation age (currently age 65) or for a minimum period of 5 years if you join after age 60. If you want to save more, it may be better to save it in SuperLife’s superannuation scheme and not in SuperLife’s KiwiSaver scheme.

Make your money work for you

You decide how your KiwiSaver Account is invested. There is a range of options available, from cash to shares. The SuperLife investment guide and SuperLife investment options will help you make a decision.

What might KiwiSaver be worth?

The example below looks at the build up of a KiwiSaver Account in the first few years, for a non-PAYE income earning person who pays $86.92 a month and chooses an investment option that earns 5% p.a. after tax and investment costs.

Over the five years, the example member pays $5,215 and accumulates wealth of $10,208 - not a bad investment

Join now

To join SuperLife for KiwiSaver complete a membership form available with the investment statement. You can download an investment statement from www.SuperLife.co.nz. You need to have your IRD number handy. Alternatively, phone 0800 27 87 37.

If you wish to save on a regular basis, you should also complete a direct debit form.

Other information – buying a home

Withdrawal for your first home deposit

If you have never owned a house and buy your first home after at least 3 years’ membership of KiwiSaver, you can withdraw all of your KiwiSaver Account balance (other than the original $1,000 kick-start and the MTC tax credits) to help buy your first home. The test is 3 years of membership, not 3 years of contributions.

First home subsidy

If you have never owned a house and will buy your first home in more than 3 years time, it may pay to contribute 2% of your income each year for at least 3 years. This may qualify you for the additional first-home subsidy of $1,000 a year, for up to 5 years (i.e. $3,000, $4,000 or $5,000) to help buy your first home. The rules for this require you to have saved approximately 2% of your income for 3 to 5 years. The details are on the Housing NZ web site (www.hnz.govt.nz). The 2% becomes 3% after 1 April 2013.

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This is not an investment statement for the purpose of the Securities Act 1978. An investment statement under the Securities Act 1978, and a disclosure statement under the Securities Markets Act 1987, are available from SuperLife free of charge.