Don't miss government match
KiwiSaver members are potentially losing out on significant retirement savings by not maximising the government’s subsidy offer, a new analysis by Westpac NZ revealed.
For every dollar a member contributes up to $1,042.86 annually, the government adds an additional 50 cents, amounting to a potential annual bonus of $521.43.
Impact of government contributions
The benefits of these contributions are substantial over time.
“These figures show that a relatively small amount invested in your KiwiSaver account a year can make a big difference to your retirement years,” said Nigel Jackson, CEO of BT Funds Management (NZ), the provider of the Westpac KiwiSaver Scheme, in a media release.
For instance, a 25-year-old who consistently receives the full government contribution could enhance their retirement fund by an additional $55,808 by age 65, assuming a 4.50% average annual return in a growth fund.
Strategies to maximize retirement savings
With the June 30 cutoff for contributions approaching, Jackson advised members to consider making voluntary lump sum contributions to secure the full $521.43. He suggested setting up a manageable weekly automatic payment of $24 into their Westpac KiwiSaver Scheme account, which can be easily done via the Westpac One online banking app.
Westpac’s outreach and education efforts
Westpac is actively working to educate its customers about the benefits of optimising their KiwiSaver contributions. It has communicated with approximately 113,000 customers through email, direct mail, and its online banking platform to inform them about their current contributions and the steps needed to maximize government matching.
Disparities in contribution rates
The bank’s 2023 data indicates that women, individuals under 40, and those in the default fund rather than actively choosing a fund are more likely to miss out on the government contribution.
“Regardless of your age, gender, or stage in life, it’s always a good time to be thinking about saving for retirement,” Jackson said.
A recent study by Retirement Commission, meanwhile, found a 36% gap in KiwiSaver contributions between men and women, mainly due to the gender pay gap.
Looking ahead
Westpac NZ, which recently reported a significant open banking milestone, continues to encourage all KiwiSaver members to review their retirement goals and savings strategies.
If you’re not sure about any aspect of your KiwiSaver account, come and talk to us,” Jackson said.
This proactive approach aims to ensure that more New Zealanders can benefit from their savings efforts and government incentives as they plan for a secure retirement.
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