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Both parents must sign children up to KiwiSaver

Q.        I would like my granddaughters to join KiwiSaver because I would like to start putting some money into their accounts. This money could help them buy their first home one day. I keep asking my daughter to organise it but she is always too busy. Can I sign them up to KiwiSaver myself? They live nearby and I see them a lot.
 
A.         You sound like a very generous grandparent and certainly grandparents can contribute to their grandchildren’s KiwiSaver accounts once they have been set up. 
 
However, your daughter will have to organise this herself, you can’t do it for her. First of all, each child will need their own IRD number so you can find out if that has been done. If they are under 16, both your daughter and the children’s father have to sign the application form and they each have to supply ID and verification of their address. They also have to provide the original New Zealand birth certificate for each child (or Certificate of New Zealand citizenship if born overseas). The parents’ ID may be their drivers licence plus a bank statement in their name (this can also verify their address).  If they are aged 16-17 just one parent is required to sign.
 
Getting all this information together is not easy for busy parents. They can meet with an an authorised financial adviser who will make recommendations, verify their ID and fill out the application forms with them. Some people find it easier to join through their bank, as the bank will already have their ID and address on file. 
 
While KiwiSaver balances are low it is more important to join than to ponder your options of which Scheme to join. Fees and performance won’t have much impact while fund balances are low. The time to do that is when your balance is over $10,000, if you are in a default scheme or don’t know what scheme you are in at all. 
 
If the children are under 18 they will not be eligible for Member Tax Credits but anyone who has been in KiwiSaver for at least 3 years can apply to withdraw their own (and any employer, parent or grandparent) contributions for their First Home. Prior to the election the Government announced some changes around the First Home Withdrawal and from 1 April 2015 people will be allowed to withdraw their Member Tax Credits as well for that First Home, leaving just the $1000 ‘kickstart’ in their account.
 
If you do start contributing to your granddaughters’ KiwiSaver accounts you should let them know what you are doing, and why. It is a great opportunity to talk to them about goal setting, saving and compound interest.   You may think they aren’t listening, but most children learn by example and by showing an interest in the topic yourself they will realise that it is important to you. 
 
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 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
 
HB Today 9 December 2015