Q I moved to New Zealand a few years ago and I was granted a permanent resident
visa six months ago. This means I can join KiwiSaver. My Kiwi wife and I have already bought a house so my KiwiSaver will be a long-term investment. I have delayed joining KiwiSaver because I don't know what scheme and fund to choose. I realise by delaying I am missing out on the employer 3 per cent plus government top-up. What is the best way to choose a scheme? This task has been sitting in my 'to-do' list for far too long now.
A New employees between the age of 18 to 65 are automatically signed up to KiwiSaver if they are eligible but someone like you already employed who becomes eligible by a change in circumstance must take the initiative themselves.
Don't waste any more time mulling over your options — let your employer know that you wish to join. They should give you a KS3 information pack "Your Introduction to KiwiSaver". Complete the KiwiSaver deduction KS2 form, give it to your employer, and they will start your KiwiSaver deductions from your next pay.
Your contributions will be sent to Inland Revenue. Inland Revenue will hold on to a new member's contributions for 62 days before passing them on to their KiwiSaver provider. This happens to every new KiwiSaver member who signs up through work.
Your employer may have signed up to a "preferred provider" scheme in which case you will become a member of that scheme. If not, you will be allocated to a default scheme by IRD and you will be sent the scheme's product disclosure statement. Your third option is to enrol directly with a provider.
It is important to note that you do not have to stay with your employer's chosen provider, or a default provider — you can switch at any time. There are currently 30 providers offering KiwiSaver schemes.
You have been procrastinating for too long. As you mention, you are missing out on 3 per cent from your employer plus $10 per week from the government top-up. Sign up today, then do your research.
The Sorted website is a good place to start. Their KiwiSaver tools are designed to educate people who may have little or no knowledge of investments. Click on Tools then go to the revamped KiwiSaver Fund Finder. You will be asked to consider your timeframe and tolerance of volatility.
You can then compare fees, service and returns for the funds within your risk profile.
Find out more about the providers via links to their websites. It is a good idea to see if you like the way they communicate with their investors and if you share their values.
Once you have found a scheme and fund that you believe suits you, you can contact the provider directly and sign up with them. At some stage you may like to talk to a suitably qualified financial adviser, if you would like someone to talk through your options with you.
Your delay in tackling this item on your "to-do" list is not only affecting your future financial wellbeing, it will also be a constant niggle at the back of your mind. Do you know that getting things done can actually release dopamine into your brain – giving you a feeling of wellbeing when you complete a task?
This item on your "to do" list can be tackled quite easily, and you will feel so much better for it.
- •Shelley Hanna is the communications manager with Peak Portfolio Management Ltd which is a Financial Advice Provider licensed by the Financial Markets Authority. Disclosure information is available at www.peak.net.nz or call 06 8703838. The information provided in this article is of a general nature and should not be relied on as a recommendation to invest in a financial product. Send your KiwiSaver questions to firstname.lastname@example.org