Q: Help! My 15-year-old son is saying I am naive.
I am a single mum of three teenagers and we live in a small three-bedroom house in a good street and nice suburb. We just need another bedroom and bathroom. So I had plans drawn up with the expectation that the renovation would cost about $2000 a square metre overall.
Quotes from builders put the price at double that. So now plan B: renovate to sell. I get quotes on doing up my bathroom and painting the outside of my house. A bathroom is supposed to cost around $20,000; all my quotes were $27,000 to $35,000. To paint the house 11 years ago cost $9,000; now it's close to $20,000.
Hence my son is saying I come across as a naive, single mum and I am primed to be ripped off by all building firms.
So what do I do now? Do I do the house up to sell (grin and bear the prices), or just sell in this market?
A: How about getting your lippy son — and perhaps his two siblings — to paint the house?
Not feasible? Okay, let's consider the other options.
Conventional wisdom on renovating before selling says that while many renovations are not worthwhile, painting usually is. But that rise in your quotes over 11 years seems extraordinary. According to the Reserve Bank's inflation calculator, wages of $9,000 11 years ago should be about $13,000 now. And the cost of paint can't make all that much difference. Perhaps you need to get more quotes.
What about the bathroom? Experts recommend fixing up kitchens and bathrooms over other rooms. Still, you may not recover the cost of a whole new bathroom unless the current bathroom is seriously unappealing. Maybe you could just paint it and add a new vanity, or mirror, or lighting. Even new door handles can lift a bathroom or kitchen at little cost.
Another argument against major changes to the bathroom is that you and three teens will have to cope while they're happening. Gulp!
A good real estate agent might also have ideas. But keep in mind that many agents just want to get your listing fast, so they're biased towards selling "as is".
By the way, you don't sound naive to me. A naive person wouldn't have done the research and got several quotes as you have. That's the best guarantee against getting ripped off - making people compete for the work.
A fair share?
Q: I have looked today (Easter Monday) at Stock Exchange information on Genesis Energy and wonder how there can be sellers with significantly more shares listed for sale than the 3226 (maximum) shares I was allocated in the Genesis share offer when I ordered 30,000.
At one price, there are seven sellers offering 450,968 shares, which equates to 64,000 per seller. And at another price, 11 sellers offering 893,790 shares, which equates to 81,000 per seller.
So what has happened to this offer?
A: Good question, given the shares were listed just the day before the Easter break. An expert in Treasury — which has managed the Government share offer process — has a couple of possible explanations:
The most likely one: "Shares in the broker firm offer were sold to brokers to allocate to their clients, and there was no cap on how many shares brokers could allocate to an individual client."
Another possibility: "Many institutions received shares and they could be the sellers. The example of seven sellers offering 450,968 could be one institution offering around 430,000 shares and six individuals offering around 3,000 each."
Solid gold response
Q: I am interested in one of the gold saving plans mentioned in your column last week. How do I go ahead with this?
A: Did you read my response last week, or just the reader's sale pitch? There's no way I would give you information about a scheme that has "fraud" written all over it. Read on.
Pros and cons
Q: As Albert Einstein said: "Two things are infinite: the universe and human stupidity."
I do not know if the writer on the subject of the gold plan is one of those referred to in the above quote or if they are simply a conman.
A so-called "money-making scheme" that relies solely on you bringing more people into that scheme is a pyramid scheme. Are people that join up total idiots, or are they the lowest of thieves, enticing their friends and family to join up to profit from their losses?
A: They might be neither. Another possibility, mentioned last week, is affinity fraud.
The fraudsters target a leader in the community and give them fantastic returns on an "investment". The target then innocently recommends the "investment" to family and friends, who sign up and lose heaps. It must be deeply humiliating for the target — to say nothing of how the victims must feel.
Contribution cut off
Q: I recently turned 65 and was disappointed to receive a letter from my SOE employer that employer contributions to my KiwiSaver account would stop. I regard my employer as a good one and expected a more paternalistic approach to superannuation and its employees continuing to provide service past age 65.
I have asked friends who are also over 65 if their employer continues to pay their KiwiSaver contribution. Both large and small employers continue to do so. Is my employer "out of line"?
A: For the information of others, employers have to contribute to an employee's KiwiSaver account only until the employee turns 65 — or five years after they joined, if that's a later date.
However, anyone can contribute to anyone's KiwiSaver account at any time, including employers of people over 65.
A survey of Employers and Manufacturers Association members found 46 per cent continue to contribute to employees after they turn 65; 29 per cent stop; and 25 per cent said they hadn't thought about it. "Probably a fair chunk [of the last group] are unaware that there comes a point when contributions are not compulsory," says EMA's David Lowe.
Presumably, too, some employers simply haven't had any KiwiSaver employees turning 65 yet. I hope, when the time comes, they're generous. It can't be that big a budget item.
Your letter got me wondering whether all state-owned enterprises (SOEs) do the same thing. So I asked Treasury.
"The colleagues I've consulted are not aware of any centrally mandated policy for SOEs regarding employer KiwiSaver contributions continuing beyond age 65," says a spokesman. "Decisions about employment policies are for the individual boards of SOEs to make, while complying with any statutory legal obligations they have under relevant legislation."
He adds: "Individuals may choose to negotiate with their employer for voluntary contributions beyond age 65 as part of their employment agreements."
Employers also don't have to contribute to an employee's KiwiSaver account if:
• They're already paying into another qualifying super scheme for the employee.
• The employee is under 18.
• The employee is not contributing, perhaps while on a contributions holiday or leave without pay.
Q: My question is about KiwiSaver and employer contributions. The company I work for includes the employer contribution in my salary, which was fine when I was first employed two years ago and the employer contribution rate was 2 per cent. In theory I was paid 2 per cent more and I paid the employer contribution ... no problem with that.
In April 2013 the employer contribution went up to 3 per cent, and so did the amount deducted from my salary as the employer contribution. My salary did not go up by 1 per cent, so in essence I am paying the extra 1 per cent, not the company.
When I queried this I was told that KiwiSaver was included in my salary (written into the employment contract) and legally they are not required to give me an extra 1 per cent. They also advised that they include their KiwiSaver contribution in people's salaries so that all staff get the 2 per cent, not just those in KiwiSaver. I also don't have a problem with that, as long as everyone received 1 per cent more in April 2013. However, that didn't happen.
A: My view is that this is morally wrong, as they are getting out of paying the extra 1 per cent, and surely this is not in the spirit of KiwiSaver. Can firms get away with this under the KiwiSaver rules (if written into employment contracts)?
Maybe, and maybe not.
You're correct that it was okay for the company to set up your initial contract as it did. "Since 13 December 2007, parties to an employment contract have been free to agree terms and conditions that include compulsory employer contributions to KiwiSaver as part of the employee's gross salary or wages," says a spokeswoman for the Ministry of Business, Innovation and Employment (MBIE).
According to David Lowe of the EMA, about 27 per cent of employers use this system, sometimes called total remuneration.
The MBIE spokeswoman adds that the employer and employee are obliged to bargain in good faith. Also, "the deduction of any compulsory employer contribution from a person's salary or wages cannot take that salary or wage below the minimum wage rate."
That's not your issue, though. You want to know whether it was okay for your employer to take the extra 1 per cent from your pay from April last year.
"That really does depend on how the person's contract is framed and how the decision was made on responding to the increased level of compulsory employer contributions to KiwiSaver," says the spokeswoman.
"If the person believes the employer has breached the contract, we suggest they talk to the MBIE contact centre or their union if they are a member."
The contact centre number is 0800 20 90 20. Give them a call.
Q: Could I point out that your last answer in your last column could do with a slight caveat?
Whenever someone asks about how KiwiSaver works for a "self-employed" person, I'd suggest you qualify your answer with "Assuming you do not pay yourself through the PAYE system".
I appreciate that last week's writer's list of costs implies they don't, but in my experience a reasonable proportion of "self-employed" people do, and the way KiwiSaver works for them is quite different.
A: Thanks for making a good point. I could argue that it would be a company — not the person themselves - that employs such a person and pays her or him through the PAYE system.
But I suppose people in that situation might regard themselves as self-employed.
And you're right, KiwiSaver is different for them. Their company has to make employer contributions.
Mary Holm is a freelance journalist, member of the Financial Markets Authority board, director of the Banking Ombudsman Scheme, seminar presenter and bestselling author on personal finance. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.
Send questions to email@example.com or Money Column, Business Herald, PO Box 32, Auckland. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.