How to Pay KiwiSaver if You’re Self-Employed

If you’re self-employed, you may not have an employer automatically contributing to your KiwiSaver account. But that doesn’t mean you have to miss out! Paying into your KiwiSaver fund is still crucial for your long-term financial security, and there’s a straightforward process for doing it.

I often hear self-employed people say things like, “I’m not sure how to contribute to KiwiSaver when I don’t have an employer,” or “Is it mandatory for me to pay into my KiwiSaver account?”

The short answers are that while it’s not mandatory, the process is pretty simple.

How KiwiSaver Contributions Work for Self-Employed Individuals

As a self-employed person, you can of course always put yourself on a salary and contribute like any other employee. But if you pay yourself via drawings, here’s how it works:

• You pay voluntary contributions: Done via online banking, just like you pay any other bill online. You can decide how much to contribute, based on what you can afford.

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• How much should you contribute?: While the government doesn’t require you to contribute a specific amount, many people aim to contribute at least 6% of their income, as that’s the minimum you would contribute as an employee. You can choose to contribute more if you want to boost your retirement savings.

Steps to Contribute to Your KiwiSaver Fund

1. Set Up Regular Contributions. The best way to ensure you’re paying into your KiwiSaver account consistently is by setting up automatic payments. You can do this through your bank, ensuring that a set dollar figure is regularly paid into your KiwiSaver fund. 

If you are using Hnry software you can set up your contribution as a percentage of each time you receive income very easily.

2. Determine the Right Contribution Amount. Think about how much you want to contribute. You might want to start with 3% of your income, or increase this amount if you’re aiming for a bigger nest egg by the time you retire. If your income fluctuates, it can be helpful to set up a percentage-based contribution, so it adjusts with your earnings.

3. Use Your Inland Revenue (IRD) Account. Another option is to pay via myIR. You  pay your KiwiSaver contributions as part of your tax payments, and IRD will transfer them directly to your KiwiSaver provider.

4. Make Lump-Sum Payments. You can make lump-sum payments directly to your KiwiSaver provider or via myIR at any time. This is a good option if you have seasonal income or want to pay larger amounts at once. You can usually do this online via your provider's portal.

Benefits of Contributing to Your KiwiSaver Fund as a Self-Employed Person

As a self-employed individual, you might be wondering if KiwiSaver is still worth the effort. Here's why it’s a great idea:

• Long-term savings: Even if retirement feels far away, every contribution you make now helps secure your future. Plus, you can use your KiwiSaver savings to buy your first home or for retirement.

  
  

• Government Contributions: If you're eligible, you’ll still get the government’s matching contribution - free money for your retirement!

  
  

• Compounding interest: By contributing regularly, you’re allowing your money to compound over time, which means more growth in the long term.

  
  

• Protection from bankruptcy: Hopefully this never happen to you; if you are made bankrupt your KiwiSaver money is protected and stays with you.

  
  

How to Stay on Track

The self-employed lifestyle is often unpredictable, and your income may not always be stable. However, contributing consistently - even small amounts - can make a significant difference when it comes to retirement.

• Review your contributions regularly: If your income changes, make sure you’re adjusting your contributions.

  
  

• Plan ahead: Since you're not getting automatic deductions, it’s up to you to plan how much you want to save.

  
  

What If You’re Not Contributing Enough?

If you’re not contributing enough to receive the government’s full contribution ($1,043 before 30 June each year), consider increasing your payments. It doesn’t have to be a huge amount - small contributions will add up, and you’ll be glad you started sooner rather than later.

Need Help Setting Up Your KiwiSaver Contributions?

If you're unsure about how much to contribute or need help setting up a regular payment plan for your KiwiSaver fund, I’m here to help. I offer free KiwiSaver reviews to ensure your contributions are on track and that you're taking full advantage of any government contributions.

Written by Cameron Steele, KiwiSaver Specialist & Financial Adviser based in Christchurch, New Zealand.

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