5 Tips to Boost Your KiwiSaver First Home Deposit

Here are five tips for boosting your KiwiSaver for your first home deposit:

Tip 1: Increase Your Contributions

IRD says the current employee default contribution rate is 3.5% of before-tax pay, with higher options of 4%, 6%, 8% and 10%. Employer minimum contributions are also 3.5% unless an exception applies. A higher employee rate can build savings faster, but it reduces take-home pay and should fit your budget and buying timeline.

To change your contribution rate:

• If you are employed: Speak to your employer - notify them in writing of the change, or complete a new KS2 form (which you can get from your employer)
• If you are not employed: Contact your KiwiSaver provider

Tip 2: Review Your Fund Choice

Review your KiwiSaver settings before relying on the balance for a first-home deposit. Different funds have different levels of risk, return and fees, so the fund should match your timeframe, risk tolerance and first-home withdrawal plans.

For example, Sorted says planning to withdraw for a first home can be a reason to move to a lower-risk fund to reduce the chance your balance drops before you need the money. Lower-risk funds can also mean lower expected long-term returns, so get provider or licensed-adviser guidance where the decision affects your deposit.

Before switching funds or providers, compare investment options, fees, services and timing. Sorted says not to choose a new provider solely on high returns because returns go up and down.

Tip 3: Make Voluntary Contributions

IRD says extra contributions can be made through salary and wage deductions, payments to Inland Revenue, or payments to your scheme provider. Check processing time and provider rules if you need the money for a specific purchase date.

Extra contributions can help build the balance, but keep enough accessible cash for legal costs, moving costs, emergency savings and lender requirements. KiwiSaver withdrawal rules mean not every transferred or contributed amount may be available for a first-home withdrawal.

Tip 4: Check Your Tax Rate

This can be especially important if you are self-employed, have multiple jobs, or your income has changed. IRD says your PIR is based on your income for each of the last two tax years, and once you have worked out your PIR you should give it to your PIE or KiwiSaver provider.

IRD says if the wrong PIR is used, the end-of-year PIE calculation can result in a PIE credit or a PIE debt. Check your PIR each year and when your financial situation changes.

Tip 5: Maximise the Government Contribution

IRD says the annual maximum government contribution is $260.72 for eligible members with annual taxable income of $180,000 or less who are contributing and are age 16 to 65. To get the maximum, you must contribute at least $1,042.86 of your own money between 1 July and 30 June. There are conditions.

In conclusion, KiwiSaver can be a useful part of a first-home deposit plan, but it is not just about increasing the balance. Check contribution rates, fund risk, PIR, government-contribution eligibility and withdrawal rules early, and get personalised advice if a KiwiSaver decision could affect your purchase or retirement savings.