Are you prepared for your retirement? If you have made no plans other than living off of New Zealand’s Superannuation, you may not be able to maintain your current lifestyle that you are accustomed to.
KiwiSaver is an easy and affordable way to save for retirement. KiwiSaver is a voluntary based savings scheme set up by the NZ Government to help New Zealanders save for their retirement. You can choose to contribute 3%, 4%, 6%, 8% or 10% of your gross (before tax) income to your KiwiSaver account. Your employer must contribute as well, matching at least 3% of your gross income.
Your funds are invested on your behalf by the KiwiSaver provider of your choice. If you don’t choose a provider, Inland Revenue will assign you one of the nine default KiwiSaver schemes, which could prove a disadvantage to you, when it comes to maximising your return on investment.
There are three ways to join KiwiSaver:
- Automatic enrolment when you start a new job.
- Opting in through your employer.
- Opting in through a KiwiSaver adviser or provider.
If you are self-employed or not currently working, contact your Wright Financial KiwiSaver adviser or your chosen provider, in order to sign-up and arrange a regular contribution amount.
The question isn’t “why” you should sign-up for KiwiSaver, it is “why not” because of the benefits it offers.
- If employed, your employer has to contribute at least 3% of your gross income into your KiwiSaver account. That’s on top of your own contributions.
- Your KiwiSaver contributions come out of your pay before you see it. This makes saving easy.
- The government pays into your KiwiSaver account as well as in the form of annual ‘member tax credits’ (if you are a contributing member aged 18 or over) of up to $521.00.
- As well as saving for retirement, you can also use KiwiSaver for buying your first home through a KiwiSaver HomeStart grant.
- If you change jobs or leave the workforce your KiwiSaver account moves with you.
If you experience hardship it is possible to access the funds in your account.
KiwiSaver is not compulsory yet. But, if you’re 18 or over and start a new job you’ll be automatically enrolled in KiwiSaver (with some exceptions). And that is a good thing!
- If you are automatically enrolled you can ‘opt out’ (leave KiwiSaver), but only between 2 and 8 weeks of starting the job. Once you join, you have to contribute for at least 12 months (If you’re 18 or younger and have been incorrectly enrolled, you can still opt out through Inland Revenue).
- You can choose to ‘opt in’ (join KiwiSaver) at any time – either through your employer or through a KiwiSaver adviser or provider.
- After 12 months in KiwiSaver, you are entitled to take a break from your savings contributions (called a ‘contributions holiday’).
Current legislation allows you to withdraw all KiwiSaver contributions (excluding $1,000) when buying your first home if you’ve been consistently contributing for at least three years. You may also qualify to withdraw your KiwiSaver if you have owned a property previously under the ‘Second Chance’ option.
In addition to a KiwiSaver savings withdrawal, there’s also the KiwiSaver HomeStart grant. If eligible, the government may contribute up to $5,000 (per member) towards buying an existing home, or up to $10,000 per member towards the building of a new home.
If you are using KiwiSaver to save for retirement, you can’t touch your money until you reach age 65 (currently). If you are between the ages 60 and 64 years old when you join, you cannot access the money until expiry of the five-year period from which you became a member.
Most KiwiSaver providers offer a range of investment funds. There are two key things to consider when choosing a fund. Its associated risk and return and the fees it charges.
Risk and return
The risk level of a fund is determined by the percentage invested in growth assets. These are types of investments like shares and property that have the potential for higher returns over the long-term and have a risk to decrease in value.
KiwiSaver providers generally describe their funds as being:
Type of fund Risk profile
Defensive Low risk
Conservative Low to medium risk
Balanced Medium risk
Growth Medium to high risk
Aggressive High risk
Our KiwiSaver Providers in order of Experience
Select Wealth Kiwisaver is new to market, with experience from Select Wealth Management who has operated for over 30 years. The Scheme is managed by Smartshares Limited (Smartshares), which is a wholly-owned subsidiary of NZX Limited (NZX). The Scheme is distributed by Select Wealth Management Limited (Select Wealth). The Scheme’s external investment manager is JMI Wealth Limited (JMI Wealth).