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How do you take a contribution holiday in KiwiSaver?

With the increase in the minimum contribution for KiwiSaver to 3% on 1st April 2013, not all KiwiSavers will feel that they can

afford these additional savings.

If you have been in KiwiSaver for 12 months, you can take a contribution holiday.  This means that you stop your contributions for a specified period of time.  You can roll over your contribution holiday for another period at the end of the holiday.  (If you have been in KiwiSaver for less than 12 months, in certain circumstances you can take a contributions holiday.)

Remember though, that these are funds that you aren't saving.  What this means is that, although you will have the additional money in your pocket (2% of your income if you were making the minimum contribution) - you will also be:

1. Missing out on the Employer contributions (these increase to 3% less tax on 1st April 2013)

2. Missing out on the Government Matching Tax Credit (MTC)  ($0.50 for each $1.00 you contribute up to $1043 contributions each year - maximum $521 Government MTC).

3. Missing out on any investment return on those investments.

4. May affect your ability to get a Subsidy when you purchase your First home.

However, if you can't afford the extra contributions - here is how you go about taking a contribution holiday:

How to apply for a contributions holiday

To apply for a contributions holiday or an early contributions holiday you can:

  • apply online if you're registered for My KiwiSaver, or
  • print off and complete a KiwiSaver Contributions Holiday Form KS6 and post it to Inland Revenue (address details are on the form), or
  • call Inland Revenue on:
    • 0800 549 472 (0800 KIWISAVER), or
    • 04 978 0800 if calling from a cellphone.

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