Diana Clement: Get credit, where credit is due

A simple calculation shows that after 25 years, the Government contribution of $521.43, in a growth fund after inflation, would amount to $20,129.

It's the last chance saloon for your free $521 KiwiSaver tax credit. Anyone who hasn't paid at least $1042.86 into their KiwiSaver by June 30 misses out on the full tax credit for this year.

Last year about $300m of this free government money wasn't snapped up, says David Boyle, general manager investor education at the Commission for Financial Capability. That's a lot of money to throw down the toilet.

Some people will scoff at $521.43, which is the exact amount. But a simple calculation shows that amount in 25 years in a growth fund after inflation would be $20,129. The figure is only approximate but it shouldn't be sniffed at.

This isn't money from your own pocket. It's just the tax credit the Government deposits into your account if you've invested at least $1042.86 of your own money over the year.

Anyone who earns at least $34,762 for the past year and contributes the minimum 3 per cent will have automatically qualified for the full tax credit.

What sometimes surprises people is that anyone who doesn't qualify through employment-based contributions can top up their KiwiSaver account voluntarily before the June 30 cut-off and still get their tax credit. You can be employed, unemployed, self-employed, or someone on a contributions holiday. The under 18s can also contribute, but don't qualify for a tax credit.

Some of those who miss out at the "last chance saloon" should know better says Boyle. "There are a lot of myths out there," he says. "People think you have to be contributing (through work) to qualify, or that they won't get anything if they don't put the full $1042 in. This is the feedback I hear when running KiwiSaver myth-busting workshops."

Even if you haven't contributed the full 3 per cent, a one-off payment direct to your KiwiSaver provider will still get a tax credit.

Self-employed and business people make up an increasing proportion of Kiwi workers and it frustrates Boyle that many don't contribute To KiwiSaver. "What part of a 50 per cent return on your money don't you understand?" he asks.

Contractors often don't realise they're not contributing to KiwiSaver through their employers. "They may have been on PAYE and their employment structure has changed. It is a growing problem (and) it really steams me up."

Not everyone has the spare cash to contribute the full amount, admits Boyle. But for every $50 you put in you'll get $25 back up to the full tax credit, he says.

It's not complicated to make a one-off payment to KiwiSaver to qualify. Each provider has its own system.

Some of those who miss out at the "last chance saloon" should know better.

At the ASB, for example, there are a number of ways of doing this. If you have online banking you can simply transfer money online from one account straight into your KiwiSaver.

If you bank with a different bank then make a bill payment by searching for ASB KiwiSaver Scheme in your online banking service. Or you can simply walk into a branch with ID and proof of address and make that payment. It's not hard.

I also searched for how to do it with a non-bank KiwiSaver. I called Mercer and, like a bank, you can find "Mercer KiwiSaver" as a bill payee on your Internet banking and make the payment. Or you can post a cheque, if you still use them. It's a really good idea to include your full name, KiwiSaver ID number and IRD number in your payments to your bank or other provider so they get to the right place.

It's the same basic process for all the other KiwiSaver providers. That's it. Providing you make the payment before June 30, your free money will be credited to your KiwiSaver in August.

"If you don't want to have to read and put up with me going on about it next year, just set up a direct debit," says Boyle.

"If you can't afford $20.06 week, which adds up to the full $1042.86 over the year choose whatever you can part with."

The contribution is the price of a packet of cigarettes, or a coffee, lunch, and a beer after work, or takeaways for the family instead of a homemade meal.

Financial adviser Liz Koh says check your bank account and you'll find lots of these little payments that add up to $20. She believes most people can find $20 a day, not a week.