As KiwiSaver providers send out Annual Member Statements, it’s the perfect time to conduct a KiwiSaver health check and ensure you’re on track to meet your financial goals. Here are essential tips to guide your KiwiSaver health check:
1. Verify Your Tax Rate
With the latest 2024 Budget announcement, the Government is offering tax relief starting July 31, 2024, which could lower your tax rate. Your KiwiSaver tax is deducted based on your Prescribed Investor Rate (PIR), calculated from your annual income over the past two years. Check your current PIR on your Annual Member Statement and use the IRD’s “Find my PIR” tool to ensure accuracy. If your PIR has changed, inform your provider immediately, as it’s your responsibility.
2. Ensure You’re On Track with Your Goals
Align your KiwiSaver contributions with your financial objectives. Confirm your contribution rate with your employer and adjust it if necessary to 3%, 4%, 6%, 8%, or 10%. Adjustments can be made through your employer, the IRD’s MyIR portal, or by contacting your KiwiSaver provider. Consider voluntary lump sum contributions to boost your savings.
3. Maximise Government Contributions
To receive the maximum $521.43 annual government contribution, ensure you contribute at least $1042.86 between July 1 and June 30 each year. This Member Tax Credit (MTC) is prorated if you join KiwiSaver or turn 18 partway through the year. Note that moving overseas can affect your MTC eligibility. Check your contributions through your provider’s portal and make any necessary voluntary contributions to meet the threshold.
4. Choose the Right Fund
Selecting the right fund is crucial and depends on your investment timeframe and risk tolerance. KiwiSaver funds generally fall into three categories:
- Conservative Funds: Approximately 30% growth assets and 70% income assets. Suitable for short-term investments (1-5 years).
- Balanced Funds: Around 60% growth assets and 40% income assets. Ideal for medium-term investments (5-10 years).
- Growth Funds: About 80% growth assets and 20% income assets. Best for long-term investments (10+ years).
Use tools like the Sorted KiwiSaver Fund Finder or consult your financial adviser to assess your risk tolerance and choose the appropriate fund.
Take Action!
An annual KiwiSaver health check ensures:
- You’re on the correct PIR.
- Your contributions align with your goals.
- You’re contributing enough to receive government contributions.
- You’re in the right fund based on your investment timeframe and risk tolerance.
For assistance with your KiwiSaver health check or to review your overall investment strategy, contact your Financial Adviser today.
10 June 2024
By Jenaia Clarke, Director and Financial Adviser
CP Wealth
Disclaimer: This article is general information and does not consider your financial situation or goals and does not constitute personalised advice. Please contact your financial adviser for advice specific to your situation. There are no warranties, expressed or implied, regarding the accuracy or completeness of any information included as part of this article.
