Q: I am 67 years old and not working. I joined KiwiSaver and will have been in five years at the end of this month. This means that at the end of this month I will cease to receive the government tax credit on my monthly contributions. If I made a lump sum contribution of say $1000 to KiwiSaver before the end of the month, would I receive the full government tax credit at the end of the tax year? I pay tax at the moment on some investments, rental property and a small kiwifruit orchard.
The KiwiSaver member tax credit (MTC) is calculated annually on a pro-rata basis for the period July 1 to June 30.
You will only be eligible to receive a member tax credit from July 1 2012 until your exact eligibility date at the end of this month.
This works out to an MTC of around $40 per month provided that you are contributing double that amount.
If you contribute $1000 before you are eligible, you may only receive around $120 in member tax credits due to only being eligible for three months of the year.
The timing of this MTC claim will depend on what you do with your KiwiSaver once you become eligible.
If you withdraw all of your KiwiSaver before June 30 2013, a final MTC claim will be processed and included in the balance you receive. Alternatively, if you only make partial withdrawal and still have a KiwiSaver balance at June 30 2013, an MTC claim will be processed as usual and paid to your KiwiSaver account.
Anthony Quirk, Milford Asset Management managing director.
Q: One thing to consider regarding KiwiSaver is that it is a very risky investment for small business owners.
This is because it seems a KiwiSaver account is not protected in the event of bankruptcy.
Thus, if you are a small business owner, and like most of us and have personally signed for various loans, be warned: if the global economy blows up and takes you with it, you can be left without your years of saving.
Of course if you had simply put the money towards your house mortgage tucked away in a trust (and gifted it every year) you would be far better off.
I think a lot of KiwiSaver investors may miss this point.
These are complex issues and difficult to cover in general terms, when considering such things you should always seek personalised professional advice.
But here's our understanding of the issues around KiwiSaver and bankruptcy: If you are declared bankrupt, all of your property "vests" in the Official Assignee - this means they have the right to do anything you could do with that property.
That includes your KiwiSaver account.
So they can apply to the trustee of your KiwiSaver scheme for a withdrawal under significant financial hardship or, if you are eligible for a full withdrawal, apply to have that amount paid to them.
This rule applies to all property of the bankrupt under section 101 of the Insolvency Act 2006; it's not specific to KiwiSaver.
This enables the Official Assignee to assist the bankrupt to repay their creditors.
When you are a business owner, decisions like whether to put your money into KiwiSaver or into your mortgage are not straightforward and should be discussed with an authorised financial adviser (AFA) who can review your individual circumstances.
Decisions around the establishment of trusts should always be discussed with a lawyer.
Joe Bishop, Kiwibank head of wealth products.
Q: Are you aware of any websites that provide a comparison of the performance of all KiwiSaver providers' investment portfolios?
This would be a useful tool to better enable decision-making regarding switching providers but I haven't been able to find a website that shows all the providers and the returns on their various portfolios.
Morningstar.co.nz is a good source of information.
Morningstar is an independent research house and its website provides a comparison of the performance returns for most scheme providers.
There is not one place you can go to see all KiwiSaver scheme providers compared on the same basis.
The good news is that regulations are expected to come into effect in April next year that will require all providers to meet disclosure and reporting standards on a similar basis.
We expect that the "total expense ratio" that we use for showing all fees and costs will become the norm across the industry as part of these standards.
The sorted website is also a useful tool for comparing the various features of each scheme.
Scheme providers should be judged on the consistency of their investment returns as measured against agreed benchmarks and their peers. However, investment returns are only one of the important factors for consideration in determining your preferred scheme provider.
David Boyle, ANZ Wealth general manager of funds management.
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 Herald's panel of industry players email Helen Twose, firstname.lastname@example.org.