Who should join KiwiSaver?
Those who hope to buy their first house in three or more years time, those near 65 who are saving anyway, and just about everyone else in between.
What’s the catch?
Once signed up to KiwiSaver you cannot opt out (but you can suspend your savings) and mostly you can’t touch your savings until you get to retirement age (currently age 65). However, having your retirement savings ‘locked-up’ is not necessarily a bad thing!
How much should I save?
The other side of this question is ‘how much should I spend?’, and this probably has a different answer to how much you would like to spend! Ask yourself what you need/want now and what you need/want in retirement? To help you with this, try www.cffc.org.nz, a website provided by the Commission for Financial Capability. It is not just a question of whether you can afford to save, but whether you can afford not to save.
Will my employer match my contribution?
Every employer is required to match employee contributions for KiwiSaver at a minimum level of 3% of gross salary.
If I join KiwiSaver, which KiwiSaver provider should I use?
There are over twenty KiwiSaver providers to choose from and it is up to you (not your employer) to choose the one you want. For the record, the writer of this piece has signed up to Civic's SuperEasy KiwiSaver Superannuation Scheme, as has his wife and children.
Can I change my KiwiSaver Provider?
You can change your KiwiSaver provider at any time and as many times as you like. The only rule is that you can only have one KiwiSaver provider at a time. To change there is no need to tell your employer, you just apply to your new provider.
Which KiwiSaver fund will perform best?
No one knows, because historical returns of an investment fund or an investment manager are not a good guide to the fund’s or investment manager’s future investment performance. However, and averaged over a reasonable period, returns on ‘balanced’ funds are expected to be of the order of 5% pa after tax and fees. The corresponding number for ‘income’ funds is 3% to 4% pa and for ‘growth’ funds is 6% to 7% pa. Please note this is not a projection of the expected returns of the SuperEasy KiwiSaver Superannuation Scheme. No rate of return for the SuperEasy KiwiSaver Superannuation Scheme is guaranteed.
What are the fees?
Each KiwiSaver scheme will have its own fee structure. For the SuperEasy KiwiSaver Superannuation Scheme there are only two sets of charges.
For each member there will be:
- An administration fee of $4.50 per month.
- Annual fund charges ranging from 0.37% - 0.38% pa of your account balance. This fee covers the management of the Scheme, underlying fund manager fees and in-fund costs.
We have no set up charge or switching fee and unlike many other KiwiSaver schemes pay no agent commission or joining fees.
How do I join the SuperEasy KiwiSaver Superannuation Scheme?
Where do I find the SuperEasy KiwiSaver Superannuation Scheme application form?
Click here for the application form if your KiwiSaver savings are going to be deducted directly from your salary by your employer, and click here for an application form if you don’t have an employer.
How do I arrange for my KiwiSaver contributions to be paid?
Click here for a payment form to complete and give to your employer (if you have an employer). If you don’t have an employer or you just wish to pay some extra, you do so by paying the IRD directly. The easiest way to do this is internet banking using the tax code KSS, but you can also do it over the counter at any Westpac Branch using an IRD payment slip and tax code ‘KSS’.
What’s the ‘Prescribed Investor Rate’ on the application form?
Depending on the level of your taxable income investment earnings from your KiwiSaver account will automatically have tax deducted from it at a rate of 28%, 17.5%, or 10.5%.
Who are the other KiwiSaver Providers?
There is a list on the IRD KiwiSaver website.
What’s wrong with using a default fund of a ‘default provider’?
Nothing at all if that is what you want. However, the default funds of the default providers are mandated to be invested very conservatively, and that could reduce your average net return when compared to investing in a growth fund by 3% pa. Now, 3% pa may at first not seem much, but when repeated year after year the effect builds up. Thus $10,000 invested for 30 years at 3% pa would be worth $24,273, whereas that same amount invested at 7% pa for 30 years would be worth $76,123, which is more than three times as much.
Is it true that there is no government guarantee for KiwiSaver?
There is no government guarantee for any of the KiwiSaver providers, so investors in the SuperEasy KiwiSaver Superannuation Scheme will be comforted to know that the Auditor General is responsible for its annual audit and that the SuperEasy KiwiSaver Superannuation Scheme Trustees have access to and employ independent actuarial and investment advice and use a range of professional fund managers (currently AMP Capital Investors (New Zealand) Limited and ANZ New Zealand Investments Ltd) for managing the investments.
Should I get independent advice?
If you can find it, yes. But be warned that some ‘independent advisors’ would never recommend the SuperEasy KiwiSaver Superannuation Scheme as it does not pay commission. Civic Financial Services Ltd is owned by local government for local government, so while not claiming to be totally independent, we are genuine in our endeavours to give the staff and families of local government the best KiwiSaver product we can.
What happens to my money when I die?
The same as to what would happen to any money you had in a bank account when you died. It will form part of your estate. We suggest if you have not already done so that you write a will, and if your circumstances have changed since your last will was written that you write a new will. Note: on getting married, any will you previously wrote is usually automatically revoked.
What makes the SuperEasy KiwiSaver Superannuation Scheme extra flexible?
The SuperEasy KiwiSaver Superannuation Scheme is one of two savings schemes on offer. The other one is called SuperEasy. This allows members employed by a qualifying employer (basically within local government) extra flexibility with how much of their savings are locked in and to what extent they are relying on the IRD to collect their savings. Both schemes use the same investment funds with the same low management fees.
Can my partner/children/great great grandmother sign up for the SuperEasy KiwiSaver Superannuation Scheme?
Yes, yes and probably no – you need to be working for a Local Authority or Council in New Zealand, or be an immediate family member. Note also that you need to be over 18 to qualify for the Government Contribution of $10 per week. To see how you can do this click here.
Where can I get more information about KiwiSaver and the SuperEasy KiwiSaver Superannuation Scheme?
You can get more information about KiwiSaver from www.kiwisaver.govt.nz, and more information about the SuperEasy KiwiSaver Superannuation Scheme from www.supereasy.co.nz.