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KiwiSaver Annual Government Contribution of $521.43 stuck in the mud.

James Sheridan BA (Hons) Economics - Financial Adviser

6th August 2021

Every year Her Majesty’s Government will give you a gift. This gift is into your KiwiSaver and it maxes out at $521.43 each and every year. To get this lovely gift, KiwiSaver members need to be between 18-65 years old and have contributed at least double that sum or $1,042.86 before the 30th of June each year. Now, most of us know this but not all. In fact, ASB’s Adam Boyd head of Wealth believes half of their 500,000 KiwiSaver Clients did not contribute enough to claim the full credit.

This contribution, barring a 50% cut by John Key’s National Government in 2013 has remained unchanged and more importantly not inflation proofed since inception 14 years ago in 2007.

This lack of inflation proofing has seriously eroded the spending power of that $521.43 contribution over the years. The Reserve Bank of New Zealand Inflation calculator indicates that in that 14-year period, the purchasing power of the KiwiSaver contribution has declined by 36.5%.

My son Jonathan has just turned 18 and is having a ball at Vic Uni. He started contributing into his KiwiSaver and for his efforts he is gifted $521.43 yearly from our government. In comparison, the Right Honourable David Parker, incidentally our Minister responsible for IRD and KiwiSaver, has a son who turned 18 close to 14 years ago, when he started his KiwiSaver at age 18, the same government contributions were 36.5% more effective. Clearly younger New Zealanders are being discriminated here.

Why isn’t the KiwiSaver contribution inflation proofed? Other benefits in New Zealand are amended for inflation annually, yet KiwiSaver contributions are missed out and frankly not discussed. Inflation is a growing menace in New Zealand too, we can all see prices rising. The current inflation rate is 3.3% and rising.

These contributions matter. I have calculated that my 18-year-old son Jonny will have $60,000 more in his KiwiSaver pot at 65, if the Government starts to inflation adjust KiwiSaver contributions. Petition anyone?

This does not constitute financial advice, please contact for important information on Financial Advice.

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