Around two million Kiwis now have just over $14billion invested in KiwiSaver. No doubt much of that amount is money that would otherwise have been spent. As their fund balances increase, many KiwiSavers are learning that small amounts of saving made on a regular basis over a long time soon build up into a tidy sum. On 1 April, there will be another opportunity to learn, as the minimum KiwiSaver contribution for both employees and employers is increased from 2% to 3%. That means those who are on the minimum contribution will have their take-home pay reduced by 1% of their gross pay. For example, if you earn $50,000 a year, your KiwiSaver deductions will increase from $1,000 a year to $1,500 a year; an increase of around $28.85 a week.

It will be timely to have another look at your budget to see what effect this increase will have. If it is simply not affordable at this time and you have been in KiwiSaver for at least 12 months, you can apply for a contributions holiday of up to 5 years. There is no limit to the number of times you can apply for a contributions holiday and you can renew it at any time. Stopping your contributions should be a last resort option, because you will miss out on your employer contributions and your annual tax credit.

While you are reviewing your KiwiSaver, check that your annual contributions are as close as possible to the optimum amount of $1,040 per annum so that you are neither missing out on part of your tax credit nor locking away more than you need to until retirement. Check too, that the fund you are invested in has an appropriate balance of risk and return for your particular financial circumstances and goals.