Question:

My income is partly from employment and partly self-employment. With regard to the former, 4 per cent of my salary is currently paid into a KiwiSaver account. As at the end of this year, I expect to be fully self-employed. Will I need to, at that point, seek a contribution holiday?

Are there any particular advantages to a self-employed person paying into a KiwiSaver scheme as opposed to any other managed fund?

Answer:

Mary Holm: There's no such thing as taking a contributions holiday from KiwiSaver if you are self-employed. Those holidays are only for employees. The self-employed and other non-employees can simply stop putting money into KiwiSaver whenever they wish.

The more important question is whether it's wise to stop contributing once you are self-employed. And the answer is definitely not. While the self-employed and non-employees miss out on employer contributions, you still get tax credits from the government, which match your contributions dollar for dollar up to $20 a week, or $1043 a year.

This doubling of your contributions means your retirement savings will be twice as big as they would have been in another managed fund - assuming you make the same return in both.

So do try to contribute enough to get the maximum tax credit. A good way to do that is to set up an automatic monthly contribution of $87. For any saving beyond that, though, I suggest you use another managed fund, because you can access the money if you should need it. It's not uncommon for the self-employed to suddenly find they need funds for something unexpected.

Mary Holm is the author of bestselling books on KiwiSaver and personal finance. She is also a highly praised seminar presenter. Her written advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following that advice.