Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose: Kiwisaver - Hard job to pull out and cash in

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Investors must usually wait until retirement age before all their KiwiSaver investments can be picked up.

Inland Revenue has indicated transtasman portability (of Kiwisaver/Super) will take place after Australia and New Zealand agree on legislative requirements. Photo / Ross Setford
Inland Revenue has indicated transtasman portability (of Kiwisaver/Super) will take place after Australia and New Zealand agree on legislative requirements. Photo / Ross Setford

My son joined KiwiSaver on January 24, 2008. When he entered the police force in 2009 he joined its superannuation scheme and applied to Inland Revenue for a contributions holiday that began on April 6, 2009 and ends on April 5, 2014.

It is his intention to continue his career in the police and obviously continue contributions to their superannuation scheme.

In view of this, when can he cash in his contribution to his KiwiSaver? My understanding is that the government kick-start of $1000 plus the member tax credit is not able to be cashed in.

Obviously any money held in his KiwiSaver account would be more beneficial to him at today's values than it would be in 30 or so years when he retires.

Under KiwiSaver, your son is not able to withdraw any funds until he reaches the age of eligibility for New Zealand Super (currently 65), except in cases of buying his first home, death, serious illness, significant financial hardship or permanent emigration.

At retirement eligibility age he will be able to withdraw everything in his KiwiSaver account.

Until then it continues to be invested.

As the balance after just one year's contributions will probably be low, it will be important that he is in a scheme with low fees.

If he has not previously owned a house and as he has been in KiwiSaver for more than three years, he could withdraw everything, except the government payments, to help buy his first home.

Your son should also consider making a voluntary contribution to KiwiSaver each year, if he can afford it, of $1043.

He then receives the $521 member tax credit from the Government.

Over the years, the extra $521 will add up. Also, he should investigate what happens if he pays the standard employee 2 per cent to KiwiSaver (increasing to 3 per cent from April 1 next year).

The police scheme's investment statement is silent on whether its employer contributions are reduced for a member also in KiwiSaver.
•Michael Chamberlain, SuperLife principal.

"I have a retirement account with AMP, set up before KiwiSaver, which is 100 per cent invested in the ASB Balanced Fund.

Once KiwiSaver started, I left this untouched and joined an ASB-administered KiwiSaver fund, also entirely invested in the ASB Balanced Fund.

I recently received statements from both providers which price the units in the fund very differently.

The ASB-provided statement has the units at about $1.04 and the AMP-provided statement at about $1.21, both dated March 31 this year.

Neither provider has given a satisfactory explanation as to why there is a difference.

At least the ASB rang me to try to explain, but said it might be that because the AMP scheme has been running longer it was worth more. They couldn't explain why the same fund has a different price.

Can you help explain the inconsistency?"

The explanation for the difference in unit prices will be related to when each fund started.

The AMP New Zealand Retirement Trust "ASB Balanced Fund" started in 2000.

When it started the unit price was $1.

Over time, the fund performance has shifted in line with the market and after 12 years the unit price is now $1.21 as at March this year. Separately, ASB established the ASB KiwiSaver Scheme Balanced Fund in 2007 with a price of $1.

This is a new fund which is invested in a similar way to the AMP ASB Balanced Fund.

As with the AMP fund, over time the market shifts and after a little less than five years the unit price has now increased to $1.04 as at March this year.

The primary reason that the prices are different is that the two funds started at different times.

It is important to note although they have the same name, the two funds are in fact different.

One is the AMP New Zealand Retirement Trust ASB Balanced Fund, while the other is the ASB KiwiSaver Scheme Balanced fund.

Therefore returns may not be identical and there may be small divergences between the two funds that relate to the fees being different for the two schemes.
•Blair Turnbull, ASB executive general manager of wealth and insurance.

"I am a New Zealander who recently returned from living in Australia and would like to transfer my Australian superannuation scheme into KiwiSaver for many of the benefits, such as continual growth as well as accessing the funds to purchase a home.
Is this possible?"

The transtasman portability between KiwiSaver and Australian superannuation schemes has been under review for some time now.

The New Zealand Government passed this bill a few years ago and it is still sitting with the Australian Government.

The Australian Government has announced it will be introducing this bill to Parliament this year and it will likely take effect from July next year.

At this stage, the Australian requirements for those transferring to KiwiSaver have not been fully finalised.

We do know that Australian-sourced savings transferred to KiwiSaver cannot be withdrawn to assist with the purchase of a first home.

However, any earnings (that is the growth or interest earned on those funds post-transfer) on Australian-sourced savings may be withdrawn for the purchase of a first home.

Australian-sourced savings transferred to KiwiSaver cannot attract member tax credits either.

The Inland Revenue has indicated the transtasman portability will take effect a couple of months after Australia and New Zealand have passed and agreed on the legislative requirements.
Anthony Quirk, Milford Asset Management managing director.

•Disclaimer: Information provided is stated accurately to the best of the adviser's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players email Helen Twose,

- NZ Herald

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Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose is a freelance business journalist who writes regularly about KiwiSaver and entrepreneurial companies. She has written for the Business Herald since 2006, covering the telecommunications sector, but has more recently focused on personal finance and profiling successful businesses.

Read more by Helen Twose

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