Self-Employed and KiwiSaver: How It Works

Being self-employed does not exclude you from KiwiSaver, but it does mean the scheme works differently for you. Without an employer making automatic deductions and contributions, you need to take charge of your own retirement savings.

Understanding how KiwiSaver works for the self-employed helps you make informed decisions about contributions and claiming available benefits.

Joining KiwiSaver When Self-Employed

Self-employed people can join KiwiSaver directly through a provider of their choice. Unlike employees who are automatically enrolled, you must actively sign up.

Choose from any of the registered KiwiSaver providers and select a fund that matches your investment goals and risk tolerance. The process is straightforward and can usually be completed online.

Once joined, you will receive a member number and can begin making contributions. There is no minimum contribution requirement, giving you flexibility around how much you save.

Making Contributions

Without payroll deductions, you need to arrange your own contributions. Most self-employed members set up regular automatic payments from their bank accounts to their KiwiSaver provider.

Contributions can be weekly, fortnightly, monthly, or at whatever frequency suits your cash flow. You can also make lump sum contributions when you have surplus funds available.

The flexibility is an advantage of self-employment. You can increase contributions during profitable periods and reduce them when cash flow is tight, though maintaining consistency optimises long-term outcomes.

No Employer Contributions

The main disadvantage for self-employed KiwiSaver members is missing out on employer contributions. Employees receive at least 3 percent of their salary from their employer, but self-employed people do not have this benefit.

This means you need to contribute more yourself to achieve equivalent retirement savings. Consider this when deciding your contribution level and comparing total KiwiSaver benefits.

Some self-employed people increase their personal contributions to compensate for the missing employer contribution. Others accept the difference and focus on other advantages of self-employment.

Claiming The Member Tax Credit

Self-employed members can claim the full member tax credit of up to $260.72 annually. To receive the maximum, contribute at least $1,042.86 per year, which is approximately $20 per week. Note that from July 2025, those earning over $180,000 are no longer eligible for the government contribution.

The member tax credit is calculated on your contributions only. There is no employer contribution component to consider, so achieving the threshold is entirely within your control.

Contributing less means receiving a proportionately smaller credit. The government contributes 25 cents for every dollar you contribute up to the maximum.

Using KiwiSaver For First Home Purchase

Self-employed members can use their KiwiSaver for a first home purchase under the same rules as employees. The three-year membership requirement and minimum balance rules apply equally.

Your variable income as a self-employed person may affect mortgage approval, but it does not change your KiwiSaver withdrawal eligibility. Lenders assess your income stability separately.

Having a healthy KiwiSaver balance can help demonstrate savings discipline to lenders, which is particularly valuable when your income documentation is more complex than standard employment.

Tax Treatment Of Contributions

Contributions from self-employed members come from after-tax income. There is no additional tax benefit beyond the member tax credit for making contributions.

This differs from some overseas retirement schemes that offer tax deductions for contributions. In New Zealand, the benefit comes through the member tax credit rather than tax relief on contributions.

Investment earnings within KiwiSaver are taxed at your prescribed investor rate, the same as for all KiwiSaver members regardless of employment status.

Contribution Holidays

Self-employed members can apply for contribution holidays, but there is less practical impact since you control your own contributions anyway. You can simply stop contributing without formal holiday approval.

However, formalising a contribution holiday may be relevant if you have previously been employed and have automatic contribution expectations from Inland Revenue.

Remember that contribution holidays mean missing the member tax credit during that period. The lost government contribution is a real cost to consider.

Optimising Your Self-Employed KiwiSaver

Set up automatic contributions that ensure you claim the full member tax credit. Contributing at least $87 monthly or $20 weekly secures the maximum $260.72 government contribution.

Review your contributions annually as your income changes. Profitable years are opportunities to boost retirement savings beyond the minimum required for the member tax credit.

Consider your fund choice carefully. Self-employed people often have longer investment horizons and may benefit from growth-oriented funds, though this depends on your individual circumstances and risk tolerance.