Question:

I am about to be made redundant. I had been contributing to a company superannuation scheme during the time I have been employed with the company. I had also recently joined KiwiSaver, so was contributing to both.

When I leave I will receive a payout from the company super scheme. I can either pay that money off my mortgage or transfer it to my KiwiSaver account.

Are there tax advantages to transferring the money from my company scheme to my KiwiSaver account?

Answer:

Mary Holm: Good on you for joining both the company super scheme and KiwiSaver. Many people don't realise that it's usually well worth it to be in both.

Generally there are no advantages - tax or otherwise - to transferring super money or any other lump sums to KiwiSaver. You'd be better off repaying your mortgage.

The only exception is if you won't end up putting $1043 into KiwiSaver between July 1 2009 and June 30 2010. If that's the case, top up your contributions to that level to get the maximum KiwiSaver tax credit.

The great advantages of KiwiSaver are the tax credits and, for many people, the employer contributions. But any extra contributions you make - beyond what is needed to get those bonuses - are just like other savings. And given the money is tied up in KiwiSaver, it's best to avoid putting extra savings there, unless you worry that you would otherwise spend the money.

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.