Kiwis miss KiwiSaver advantages
More half of the 2.15 million KiwiSaver members are either not contributing to the retirement scheme or not saving enough to collect the $521 annual tax credit from the Government, according to the Inland Revenue Department.
KiwiSaver members need to contribute at least $1042.86 to their account a year to be eligible for the credit.
Of those that did not qualify for the credit about 22 per cent received benefit payments as all or part of their salary and a further 23 per cent had no income for the year. Children made up 64 per cent of those with no salary, IRD said in its report on the scheme for the year to June 30.
Financial Services Council chief executive Peter Neilson said the non-contributing accounts could have been set up for children or retirees to claim the $1000 Government kickstart bonus.
Kiwis could also be missing out on the credit because they cannot afford to save, Neilson said.
Many did not understand how the scheme worked and that saving $1043 a year would earn an extra $521, Neilson said.
The Government transferred $677 million to KiwiSaver providers for the year to cover the $1000 "kickstart" for new members and the $500 tax credit, according to the IRD report.
Just over half of the eligible population has joined Kiwisaver and the scheme has grown to have collective investments worth more than $16.6 billion, IRD said.
On average 15,000 new members joined KiwiSaver each month in 2013, the report said, down from 17,500 in 2012.
Of those, 61 per cent chose to join rather than being auto-enrolled.
BY THE NUMBERS
2.15 million members
$16.6 billion assets
58 per cent members contribute 3 per cent default rate
$1.5b member contributions in 2013
$833 million employer contributions in 2013
$677 million Government contributions in 2013
136,167 scheme transfers
249,872 Kiwis opt out
61 per cent opt in
67 per cent choose scheme in 2013
33 per cent in default schemes