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KiwiSaver: what it means for contractors and the self-employed

02 Jul 2007
The Government's KiwiSaver initiative came into effect on 1 July, but if you're a contractor or self-employed - as so many in the creative industries are - you'd be forgiven for feeling a bit in the…

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The Big Idea Editor

The Government's KiwiSaver initiative came into effect on 1 July, but if you're a contractor or self-employed - as so many in the creative industries are - you'd be forgiven for feeling a bit in the dark about how it affects you.

Well, there's good news and there's bad news - The Government's KiwiSaver initiative came into effect on 1 July, but if you're a contractor or self-employed - as so many in the creative industries are - you'd be forgiven for feeling a bit in the dark about how it affects you.

Well, there's good news and there's bad news -Good news first: Everyone who joins the scheme is eligible for the Government's tax-free contribution of $1,000. However, contractors fall into the same basket as self-employed people, so aren't eligible for employer contributions.

Also, despite the erratic nature of self-employed income, only employees are able to take unlimited 'contributions holidays' when times are tough. Self-employed people need to apply to their scheme provider for a 'savings break'.

To find out more about the initiative's benefits and incentives, visit the KiwiSaver website.

What contractors and self-employed people need to know about KiwiSaver:

  • To join, you'll need to choose a scheme provider and apply directly. You and your provider will need to decide how much and how often you'll contribute.
  • Once you opt in to KiwiSaver you can't opt out.
  • Those wanting to access the housing deposit subsidy must meet the same criteria as salary and wage earners. This will include providing evidence that they have contributed at least four per cent of their last three years' taxable income (up to a maximum of five years).
  • KiwiSaver isn't guaranteed by the Government. This means that you invest in a KiwiSaver scheme at your own risk.
  • If you want to stop contributing for any period of time you'll need to agree this with your scheme provider.
  • If you later start earning a salary or wage, contributions will start being deducted from your pay at a rate of 4% or 8%.
  • You can make voluntary lump sum payments whenever you like. Once you've made a lump sum payment it's 'locked in' until you're eligible to withdraw your savings.

    For more information, visit the Kiwisaver website.

    2/7/07

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