Shelley Hanna: Pays to keep track of KiwiSaver

Q. I joined KiwiSaver in July 2007. Because I am self employed I have been contributing $100 per month in order to get the full tax credit each year. I switched from one fund manager to another one in April. I got a Quarterly Report dated 30 September from the new fund manager which I have only just got round to reading. It showed that the $9510 that I had in April had shrunk to $8960. I have continued to contribute and should also have received $1042 in tax credits. Have the markets been that bad or has money gone missing?

A. Well done for spotting what looks like an error. The easiest way to find out is to go online and check your transactions. Because you are contributing a fixed amount each month you will quickly see if some of your contributions have been missed, or if you have not received your full entitlement of tax credits from the IRD. These are the most likely scenarios.

If you contributed $500 from May to September and received $1042 from the government, your balance could have increased to over $11,000 if markets were positive.

I agree that $8960 does not look right as that indicates a fall of close to 20 per cent. Markets have been bad, but I can't find any KiwiSaver fund that has lost that much over that period. The most volatile funds were down 9 per cent to 14 per cent over the 6 months to the end of September - not 20 per cent. The most likely scenario is that you are missing some of your tax credits, particularly as you changed fund manager during the year.

At the end of June each year your fund manager provides information to the IRD on your contributions, so that tax credits can be calculated and added to your savings.

As you are aware, you need to contribute $1042 or more yourself (or $87 per month) to get the full amount of tax credits each year.

I suspect that your previous fund manager did not supply full information to your new manager and you received tax credits for just 3 months worth of contributions. So instead of receiving $1042 you only received around $300.

Your current fund manager will be able to sort this out for you.

They will have a toll free number that you can call. All fund managers are required to keep detailed records of all contributions from Day 1 of KiwiSaver so that at any time they can identify how much you have contributed personally and how much has come from government top ups (this is essential for calculating First Home and Hardship withdrawals).

Your fund manager will be able to get the records from your previous fund manager, and then claim any shortfall from IRD on your behalf.

All investors in KiwiSaver should check their balance online every few months, to keep track of contributions and tax credits.

Read the reports that the fund manager provides and keep information such as your account number and log-in information in a file. Fund managers all strive for accuracy, but you should keep an eye on your balance as well.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.