Surely family bonds are more important than how much more someone got from an estate? Photo / 123RF
OPINION
Q: On the balance between siblings — an issue in recent Q&As: my father-in-law divided his estate equally between my wife and her only sister, and left small separate equal amounts to their children. But one had one child and the other had two. This was seen as unfair.
A: I’ve seen bitter fights within whānau about this issue. There are two ways you can look at the situation:
I think the second argument is stronger — although some will disagree with me.
There’s another issue that sometimes arises too. What if, after the grandparent dies, one of their children produces more offspring? The new babies will miss out.
When making their will, the grandparents might think, “All my kids have finished their families”. But what happens if, say, your 60-year-old son’s marriage ends, through divorce or death, and he enters a new relationship with a much younger woman, and they produce more kids?
My suggestion is to make the legacies in these situations small — perhaps a few thousand dollars. Then the parents can probably give the same amount to children born after the grandparent’s death.
Also, if the amounts are small, people are less likely to get upset about, “Your family got more than mine!”
Come on, everyone. Surely family bonds are more important than that stuff.
Q: I have been reading your column since the 1990s when I first started getting the Herald on Saturday in Tonga — the only real news!
I see that sometimes you have people with serious money problems and you send them off to get budget advice. I have been in Debtors Anonymous for about six years, and it is very helpful for people with compulsive spending and debiting habits.
As you probably know, 12-step programmes work by attraction rather than promotion, so we are not looking for a publicity push — just thought it might be another useful tool in your toolbox. There are a couple of meetings a week in Auckland.
A: Thanks for this. I certainly know of 12-step programmes — most notably Alcoholics Anonymous. They work well for many people. But I didn’t know there was one for people having problems with debt.
The Debtors Anonymous website says, “Is your life unmanageable because of debt? Are you sick of bouncing checks, paying late fees, and having creditors knocking at your door? Debtors Anonymous offers hope for people whose use of unsecured debt causes problems and suffering in their lives and the lives of others.”
Debtors Anonymous currently runs two weekly Zoom meetings in New Zealand. For the Monday evening meeting see tinyurl.com/NZDebtorsMonday and for the Thursday evening one see tinyurl.com/NZDebtorsThursday.
Q: I Hope you can help me with some advice. I actually feel a little embarrassed, as I’ve made some bad decisions financially.
I’m a single 58-year-old female (single mum but my daughter is now 21). I have a $600,000 mortgage, with about another $600,000 equity in the property. When I applied for the mortgage, I had to choose between KiwiSaver or mortgage, and obviously I decided on the mortgage.
Knowing that there will be a fairly good chance I won’t ever be mortgage-free, should I sell my home, save the equity and rent? I am healthy, still working fulltime with a base salary of $120,000.
My daughter wants to pay the mortgage with me (go on the title as she has some savings), but I’m not sure I want her to do that. I feel like she is better off getting herself a small investment property.
A: If everyone who made a bad financial decision was embarrassed, we would all be walking around red-faced. Besides, there were no alarm bells jangling as I read your letter.
On the KiwiSaver versus mortgage choice, I recommend trying to do both.
Ideally, put in 3 per cent of your pay if you are an employee, so you get the employer and government contributions. If you’re not an employee, or if you really can’t afford 3 per cent plus mortgage payments, go on a savings suspension but put in $87 a month, paid directly to your provider. This will get you the maximum government contribution of $521 a year.
Why do this? In KiwiSaver, because of the government and employer contributions, the return you get over the years is higher than on other investments of a comparable risk, including a house. It’s a real pity to miss out on that.
However, beyond contributing the minimum to KiwiSaver to get all the perks, if you have a mortgage it’s a good idea to put all your other savings into paying down the loan as fast as possible.
In your situation, then, I suggest you join KiwiSaver — or restart your contributions. You’re on good pay, so I’m hoping you can make that happen. That will let you build up some cash for retirement.
On your home, I don’t see any reason to sell it at this stage. Assuming that you prefer to own your own place, you’re best to stay in the house market.
When you retire — or sooner if it suits you — you could look into moving into a cheaper home so you can be mortgage-free, and hopefully have some cash to add to your savings. It might be an apartment or a smaller home, or it might be a similar house to your current one that is cheaper simply because it’s further from downtown.
Later in retirement, you could look into a reverse mortgage, to make use of some of the equity in your home. I’ve written lots about this over the last few months.
I’m not keen on your daughter becoming a part-owner of your home. At just 21, in a few years she might well find she wants to use her savings for setting up a business, further education, travel or buying a home of her own.
Q: Last week, a reader asked about getting KiwiSaver government contributions in the year he/she turns 65. In your answer, you stated, “You can make that contribution at any time. It doesn’t have to be before your birthday”.
I had an argument with my KiwiSaver provider over just this issue. I made my payment in the year in which I turned 65, but after my birthday. I received no government contribution for the portion of time before my 65th birthday.
The provider insisted the money had to be deposited prior to turning 65, even though their email said, “You may wish to make a contribution prior to the 30th of June to maximise any potential Government Contribution.”
When I queried this, he said it related to a full year while still 64, even though the email specifically referred to me turning 65! Then he said they were not responsible anyway, as government contributions were managed by IRD, and it was IRD who would (or would not) make any payments due.
I would not like other people to be misled by your information, if it is not correct. If, however, you are right, then I will be having another argument with my KiwiSaver provider (and probably moving my funds).
A: Okay, the battle with your provider is on! Inland Revenue confirms what I said last week. The legislation “makes the fact the member made the contribution after they turned 65 irrelevant as long as:
“The contribution was made on or before 30 June; and
“Their KiwiSaver membership was still active at the time they made the contribution.”
The IR spokesperson also says it’s the provider’s job to tell Inland Revenue who is eligible for a government contribution.
“If by the time someone made the extra contribution, their provider had already made a final government contribution claim for them, then the provider should have filed a revised claim to include the extra contribution. IR would then recalculate their government contribution and pay any additional amount to their provider.”
It’s not too late. “Assuming they are still a member, their scheme can still file a revised claim for a member at any time (including in subsequent years),” she says.
Time to get back to your provider, perhaps showing them this Q&A. If you’re not happy with their response, contact their disputes resolution scheme. They have to tell you who that is. The disputes scheme is entirely separate from your provider and its services are free to you.
After this is resolved, I agree that it might be time to switch to another provider. Do let us know how this goes.
Q: I’m writing about the answer you wrote last week about surcharges. I think you need more context around the bank’s charging for merchant services.
We are a relatively large cafe in Taupō and have managed to get our merchant fees down to 1.8 per cent for both contactless and credit cards. I know for a fact that many cafes and bakeries (especially smaller ones) around the country are still being charged 2.7 per cent, even 3 per cent, for this.
The fees the banks charge appear to be related to the total value of the transactions going through. So while the massive supermarket chains are putting through millions of dollars a day, a small cafe might only be putting through a couple of thousand or even a couple of hundred dollars a day.
The business has the physical terminal rental, merchant fees directly with the bank, and Paymark fees. Most are locked into three to five-year contracts, so they can’t change to a cheaper service even if they find out there is a cheaper one.
A: It seems I was too harsh on the bakery that a reader complained about last week.
The bakery had charged him 27 cents extra on a $10 purchase of a pie and a sausage roll, which he bought with a contactless card. I quoted the Commerce Commission’s website as saying that, while the payment fees that businesses pay vary, many payment service providers “offer rates of 0.7 per cent for contactless debit card transactions and 1.5 per cent to 2 per cent for domestic credit card transactions.”
The reader had paid 2.7 per cent, which I called “suspiciously high”. But your letter suggests that this charge might simply reflect the cost to the business when a customer uses a contactless card. Perhaps the Commerce Commission needs to change its advice.
Apologies to that unnamed bakery, and other businesses in similar situations.
Readers might want to note that the Commerce Commission also says every business must offer at least one fee-free way to pay — often by cash or inserting or swiping a debit or Eftpos card.
Q: With reference to your correspondent in last week’s column being charged 2.7 per cent for using a card, I think you should be aware that Sharesies, one of the most popular investment websites, does the same if you transfer money into your “wallet” using a card. The charge is $16 on a $600 transfer.
When I wrote to them to point out that this was contrary to Commerce Commission advice and government policy on reducing fees, they replied that they use an offshore agent for card transactions (Stripe), and had no intention of changing.
To be fair, they do allow fee-free bank transfers into the “wallet”, but gouging by financial firms should always be called out.
A: There’s good news. “Sharesies is currently building out another payments service to offer a cheaper alternative for instant payments,” says a spokesperson.
“But our overall strategy is to encourage people to use the free bank transfer service where they can.
“For those who want to use a card for instant top up or purchasing gifts, we charge 18c, plus 2.65 per cent (this is based on the different rates charged by the card providers). We always show the fee that you’ll be charged before you confirm a card top up.”
She adds that “Fees differ on each investment platform, but what we charge is in a similar range to those of other providers.”
Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions 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 mary@maryholm.com. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
'Challenging market conditions': revenue up but devaluations, other items hit bottom line.