Happy 12th Birthday KiwiSaver
This month marks the 12th anniversary of KiwiSaver. Over that time, we have seen many changes, but the greatest achievement is that almost 3 million Kiwis so far have enjoyed the benefits of what KiwiSaver offers.
Some of these key benefits are:
- Access to a wide range of investments in a competitive managed fund structure.
- Regular contributions from the government and if employed, your employer.
- Direct ownership - it’s your money.
We make a choice to save into KiwiSaver. Until that changes, we should engage more often with our advisers and scheme providers to ensure we continue to get the best from our plan.
Lifetime are committed to helping you on this journey. Life can throw the odd curve ball and when that happens it’s important to take some time to check what’s important.
KiwiSaver does not need to be complicated. We encourage you to get the basics right and keep up to date. The basics being:
- Have a plan. How do you plan to use your KiwiSaver? Could it be for a home deposit, a world trip at 65, or perhaps to provide a better lifestyle through your retirement years?
- Is your KiwiSaver invested appropriately for your plan?
- Are you taxed correctly and are you receiving all the benefits you should each year?
Many of us just do not have time to check on the basics. Lifetime have developed an effective online questionnaire to help check if you are OK. If you would like to know more about this, please get in touch with your adviser or drop us a line at firstname.lastname@example.org. If you’ve already taken care of this – great! What about your family or close friends? Getting it right now could be the difference of thousands of dollars when you need it. If you’re unsure, simply drop us a line.
Life can throw the odd curve ball and when that happens it’s important to take some time to check on what’s important.
KiwiSaver – The Changes
Earlier this year Parliament announced some changes to KiwiSaver initiated by the Government that were to be rolled out over certain timeframes. We have put together the following handy table to make sense of these changes with the corresponding dates and what they mean for you.
|Before the changes||From 1 April 2019||Comments|
|Contribution rates||3%, 4% or 8%||3%, 4%, 6%, 8% and 10%||Wage or salary earners have more choice. To make a change either contact your employer or download this form IRD KiwiSaver deduction form. All members may also add voluntary contributions of any amount. Employer contributions are not affected.|
|Can I stop my contributions?||Yes - this was referred to as a contribution holiday.||Yes - now referred to as a savings suspension.||Not contributing may have a significant impact on a members’ long-term wealth. A savings suspension may apply for 12 months. If required for longer it needs to be renewed.|
|Does the government still chip in?||This was referred to as a member tax credit.||Yes - now referred to as a Government Contribution.||The old wording created some confusion. The amounts and criteria remain unchanged.|
|From 1 July 2019|
|I am over 65, can I join KiwiSaver?||No.||Yes.||The main difference being you will not receive any government contributions. Access to your KiwiSaver is not restricted.|
|I am over 60 and considering joining KiwiSaver. Can I access my KiwiSaver at 65?||No- there was a 5-year lock in period.||Yes.||The main difference being you will stop receiving any government or employer contributions once you withdraw. Access to your KiwiSaver is not restricted.|
|From 1 April 2020|
|I am a member but was over 60 in July 2019. Can I opt out of the 5-year lock in?||No.||Yes.||The main difference being you will not receive any government contributions and of course no employer contributions. Access to your KiwiSaver is not restricted.|
You’re sitting in your favourite restaurant, feeling famished. The waiter arrives and reads out a long list of mouth-watering specials. Yet the moment he walks away, you find you can recall only the last item on the list. Congratulations, you’ve been struck by the recency effect.
One of the most persistent debates in the investment industry is whether investors are better to use passive or active managed funds. With strong advocates on both sides of this debate, it may seem like an obscure discussion. However, for investors, long-term performance data tells a conspicuous story.