Site Designed By Airnet
Casual workers saving for retirement nest egg
 
Q.           I haven’t had much luck finding a full time job but I have several employers who give me casual work. I have never joined KiwiSaver because of my work situation, but I would like to get something started as I’m not getting any younger. Can someone like me join KiwiSaver?
 
A.            Yes, anyone under the age of 65 and allowed to live in New Zealand indefinitely is able to join KiwiSaver.
An employer taking on a casual or temporary employee (that is someone employed for 28 days or less) is not required to enrol that person into KiwiSaver automatically. What is a temporary employee? A temporary employee is an employee who is employed to work "as and when required", without a specific end date, starts their period of employment each time they are engaged to work, and ceases each time that engagement ends.

If an employee is engaged for future work before the previous engagement has ended, the combined engagements are considered as one period of employment. As long as each period of employment remains 28 continuous days or less, these employees are not subject to automatic enrolment.

Casual and temporary employees can join KiwiSaver by opting in. You can either fill out and give your employer(s) a KiwiSaver deduction form (KS2) or sign up directly with a KiwiSaver Scheme provider. There is a complete list under “Providers and Schemes” at www.kiwisaver.govt.nz. You can also get help from a financial adviser or someone at your bank.

Once you have joined KiwiSaver your employer(s) are required to deduct 3% from your wages and pay it into your KiwiSaver Scheme, and contribute 3% themselves as well. If over the course of 12 months you earn say $25,000, you will contribute around $750 to KiwiSaver while your employer will contribute about $620 (a bit less as tax is deducted before the amount goes into your KiwiSaver). Under current rules if you contribute at that level you will also qualify for an annual top up from the Government of $375. At that rate over 10 years you may accumulate a tidy nest egg of around $23,000 at a return of 6% per annum (or $21,000 at 4% per annum). I think most people would agree that this is a fairly easy way to build up a nest egg and the money will make your retirement more comfortable.

As you are an existing employee opting in, you can choose to contribute from one or all of your jobs by giving each employer a completed KS2 form (ask your employer for a form or find one on the IRD website). If you find that you can’t make ends meet then you can apply for a contributions holiday after 12 months of being in KiwiSaver.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06-8703838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz
 
As published in the HB Today 27 July 2015