For New Zealanders: Kiwisaver

[Strawberrykiwi75]

So I'm not sure how many Kiwis will see this but I was just catching up on the news on Stuff and saw this discussion/debate on whether or not people should be members of Kiwisaver. I wondered what other Mustachians thought about the poster, and the commentary? Especially if they have been following what Labour proposes to change regarding Kiwisaver if elected.

http://www.stuff.co.nz/stuff-nation/assignments/what-issues-will-get-your-vote/10009710/Is-KiwiSaver-sensible

For those of you who don't know what Kiwisaver is (eg. not a NZer, living under a rock, the financially illiterate etc), it's our answer to 401k's etc. Once you join, you're in for life, you get free money from the government and your employer has to contribute a minimum of 3% of your earnings. Here's a link with more info if you want to know the details:

http://kiwisaver.govt.nz/new/about/how/ks-works.html

Just interested in a different perspective :-)

[nz]

I am a fan of kiwisaver, it's not perfect by any means.....but if you intend to live until you're 65 and beyond then it's hard to beat.  ( please let me know if anyone knows of a more generous retirement scheme......)

[the lorax]

Hi
Fellow New Zealander here...
There are some good points raised in the post, although I don't agree with their comment on the return given the match from the employer (unless they in fact dock from your pay) and the government contribution. It's anybody's guess what climate change, shifting political power and population patterns will do to any market returns, not just those of kiwisaver funds. I thought studies have shown that savings going into kiwisaver have mostly been savings that would have have gone into other investment vehicles anyway so I'm not sure that it can be right to say that kiwisaver funds would be driving up prices in the local share market however intuitive that might be given the bull run we've had. In any case we've been told for years that the local sharemarket has been starved of capital, can't win!
I do worry they could be right about a future government changing the rules though. I'd sincerely hope they wouldn't be raiding individual accounts as happened in Cyprus but I'm guessing they might be tempted to reduce superann for those who have their own savings which would completely stuff our retirement planning!
by they way - is it not possible to take an indefinite contributions holiday anymore?

[gooki]

Its fucking good because it got people of all ages started on investing for retirement.

I don't think it should be mandatory, and anyone with half a brain will be investing some of their after tax dollars elsewhere.

As for the article, just seems like a lot of scaremongering.

The great thing about having a lot of people in kiwisaver means any politician who fucks with it is in for a major backlash.

[Accountess]

Given the state of society at large it is completely necessary. It is a great way for the younger people to save up for a house. Superannuation as the rules stand cannot continue. The government is expected to give a hand in providing for the elders, this is a way of doing it by weaning people off slowly.

Me personally I am with Smart Kiwi growth fund. Index fund.

The article itself isn't packed with critical thought and was most likely written to get clicks rather than getting clicks and saying something valuable. Contrary without actually saying  much.


I stick to interest.co.nz for my financial news.

[Less]

I am a kiwi-saver. I joined by accident before i really got to thinking too hard about it. My summer job employer enrolled me and then I went on Christmas holiday. By the time I got back to the opt out letter the period had expired.

So anyway I have stuck with it and it has gone OK for me. I must note that since most employers negotiate a total fixed package, (then allocate the last 3% to cash, super or kiwi-saver) and the government contribution has been reduced significantly, the benefit of the system is not that great. After fees etc. many of the schemes are not making much above inflationary rates. The significance is in the critical mass and the fact that it has got people thinking.

I am still waiting for some politicians to map out what super is going to look like by the time the 20-to-30-something bracket hit retirement age. Probably shouldn't hold my breath. It is very hard for any term elected government to plan a long way ahead.

[Boganvillia]

I joined KiwiSaver as a recent immigrant when I joined the local workforce. At age 41 I have $50K of superannuation in Australia (which now I will probably only be able to access at age 65, given that pension age is now 70 for people my age, and preservation age will keep step at 5 years ahead of pension age) so my KiwiSaver will be supplementary only to my Australian super + my own stash. Therefore I have chosen a fund with an aggressive strategy (AMP One Path Aggressive) seeing as there's not a whole lot there and it has 25 years to do its thing. A bit of a flutter.

As an Australian with its then 9%, now 9.5%, compulsory employer contributions, coming to NZ with its then 2% now 3% scheme was interesting in that they hadn't gone nearly as far. I am all for it, though. NZ has non-means tested pension - another difference between the countries.

[Annamal]

I'm not in kiwisaver and I probably should be. I joined up with the government retirement savings scheme before kiwisaver existed and for a while I was getting 1% more contribution from my employer for that scheme over kiwisaver.

Now that difference is gone I should probably start up a kiwisaver account for the extra $500  a year from the government.

The one big advantage to my current scheme is that I can save more than the 3 % required  and that over flow can be drawn out at any time (I've been consistently putting in 5% of my own money since I joined).

[kiwichick]

Annamal, I'm in a similar boat, where my employer's super scheme is better than Kiwisaver and I can withdraw it upon leaving my current employer rather than waiting until 65. However, I still contribute $1043 a year to Kiwisaver to get the $521 government match (while on a contributions holiday - I joined before switching to my current employer).

Since you haven't yet joined Kiwisaver, and there's a 1 year minimum contribution period before you can take a contributions holiday, I'm not sure how it would work out for you, but it's worth investigating.

[Less]

So I learnt something new about kiwisaver this week.  Seems there is a small tax incentive to save into the scheme as it runs on tax ESCT brackets that are higher, and tax rates that are slightly lower than  the usual PAYE ones. 

I guess since it is a one off saving it might not be that significant over the life of the investment.