IT IS two and a half years since the Government launched KiwiSaver and you would expect the public to have a good basic understanding of how the scheme operates.
Based on discussions with clients, it is fair to say that, generally, this is not the case.
Three of the more common misconceptions
are that the Government guarantees the money people put into their KiwiSaver accounts (it does not), that the initial $1000 kick-start is no longer available (it is), and that all contributions are locked up until retirement (depending on circumstances, this may not always be so).
KiwiSaver offers membership benefits to encourage saving. They include a $1000 Government kick-start for all new accounts, employers' regular contributions, and an annual member tax credit paid by the Government for (most) KiwiSaver accounts. In essence, the sooner you get on board, the more Government money you get.
Locking away funds and making them inaccessible until retirement is certainly the aim of the scheme. However, members may be able to access their funds in some circumstances, such as in cases of significant financial hardship, serious illness, leaving the country permanently, or to buy a first home.
The Government does not guarantee all money put into KiwiSaver accounts and such accounts carry the same investment risk as other savings or superannuation schemes.
For this reason, we believe it is important for savers to understand, (and be comfortable with), where their KiwiSaver funds are invested.
This is why our Forsyth Barr KiwiSaver Scheme offers, in addition to the two standard (balanced and growth) portfolio options, a Personal Choice alternative.
The Personal Choice option provides investors with added flexibility and choice by enabling them to select their preferred investment sector exposures and effectively select the composition of their own portfolio.
Of particular interest to those who have worked overseas:
British Pensions can be transferred to KiwiSaver, which is something we have arranged for clients locally.
Soon it will be possible to transfer Australian Superannuation Schemes back to New Zealand, a facility that is expected to be made available some time this year.
Another feature not well understood by employers is the Preferred Provider arrangement. This is something that is simple to put in place and has benefits to employers such as assisting them with the administrative burden of meeting their responsibilities, and providing a contact person for staff with KiwiSaver queries.
* Disclaimer: The above comments are for general information purposes only. This article is not intended to constitute investment advice under the Securities Markets Act 1988. If you wish to receive specific investment advice, please contact your investment adviser. A prospectus and investment statement for the Forsyth Barr KiwiSaver Scheme is available on request and free of charge. Disclosure statements for Forsyth Barr and any of its investment advisers are available on request and free of charge.
Andrew Davis is a qualified investment adviser and licensed sharebroker with Forsyth Barr in Tauranga. He may be contacted at 0800 367 227 or email: andrew.davis@forbar.co.nz
IT IS two and a half years since the Government launched KiwiSaver and you would expect the public to have a good basic understanding of how the scheme operates.
Based on discussions with clients, it is fair to say that, generally, this is not the case.
Three of the more common misconceptions
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