Kiwisaver - Are You Joining?

[ke2nv]

We had an accountant come around to work today and we had to have a nice big meeting about how great Kiwisaver is and how by the time Im 65, Ill have $450,000. There was also various yawns from around the room. Will you be joining Kiwisaver? I am going to in 6 months when i turn 18, because at the moment the government wont put the $1000 into my account as a start off, because im not 18.
Your thoughts!?

[Alex B]

Yeap i will be next year when your buisness has to start contributing. I dint see alot of point until then.

[snwtoy]

Not yet.

Kiwisaver is a lot more complicated than they make it out to be. You need to do a lot of investigation into the rates of return and fees from each provider in the scheme, as they vary significantly.

Essentially though, "kiwisaver" is just a blanket front end for getting you locked into this thing for the next 30-40 years. Once the IRD pass your account on to the investment firm, it's really no different to any other scheme apart from you're locked in and can't get the money out.

I'm going to wait. Providers not selected as 'compliant' will surely be offering enticements to get people to join, otherwise their new membership rates will drop to zero. This will be interesting.

The other thing is, I would love to be one of those provider company owners about now, they are about to get RICH RICH RICH.

[Mad Murphy]

I prefer to invest my own money myself. I don't want to have it locked up till' I'm 65.

[Alex B]

Depends on situation, ill most likley use it to buy my first home.

[matt dunn]

I am not.

From what I understand, once you sign in, you can never sign out.

In 10 years time if you want to stop paying permanently, you cant.

Also you dont get the money when you retire as a payout, you get it drip fed to you for the rest of your life.


Also why should I invest money with a finace company and get 5% intrest,
when I have a mortgage and am paying 9% on that.
In my view i'm better off to pay the mortgage off first.

[thornz]

I am not.

From what I understand, once you sign in, you can never sign out.

In 10 years time if you want to stop paying permanently, you cant.

Also you dont get the money when you retire as a payout, you get it drip fed to you for the rest of your life.


Also why should I invest money with a finace company and get 5% intrest,
when I have a mortgage and am paying 9% on that.
In my view i'm better off to pay the mortgage off first.

We had people come into work today, and just to clear up a few of you statements there.

1: 12 months after intial sign up, you can take a break from payments for up to 5 years, and after this 5 years you can keep taking another 5 years payment break and repeat this until you 65 if you wished, and you will still get the initial $1000 the government gave you. So you CAN stop paying into if you wish.

2: once you hit 65, it will all be paid out in a lump sum to you.

The presentation they did was bloody good, pretty much completely understand the scheme now. However i wont be joining up to it. Personally I don't plan on retiring at 65, so dont fancy having to wait till then to get my money.

[matt dunn]

Well there you go.

Show you how much lack of info there is about it, as i must have had it wrong.

[snwtoy]

2: once you hit 65, it will all be paid out in a lump sum to you.

Actually, that's incorrect on two counts:

(a) Although 65 is the current age of entitilement, that can be changed at any time by the govt. It could easilby become 60, or 70 or whatever.

(b) The payout method has not been finalized yet. So it could be lump sum, could be drip feed, could be user decides.

[snwtoy]

Depends on situation, ill most likley use it to buy my first home.

There are restrictions on this too. There is an income, and house price threshold. Plus I have seen from two sources (an IRD presentation and their website) conflicting information as to whether the house buying entitlement is purely a subsidy of up to 5k from housing nz, or whether you can withdraw your own savings (up to a limit???) as well.

[thornz]

2: once you hit 65, it will all be paid out in a lump sum to you.

Actually, that's incorrect on two counts:

(a) Although 65 is the current age of entitilement, that can be changed at any time by the govt. It could easilby become 60, or 70 or whatever.

(b) The payout method has not been finalized yet. So it could be lump sum, could be drip feed, could be user decides.

Yip you are right, by the time most of us reach "retirement age" it could have changed to 70, but that is how it stands at the moment. Part of the reason i'm really not so sure about it, is that who's to say what the future governments are gonna do to the scheme and adjust it from its original state.

From what they said today, it was a lump sum payout, but there will perhaps be an option for a drip feed option, but as it stood now from my understanding the plan is a lump sum.

[rolla_fxgt]

yeah gonna join, and im a student! 4% of what i earn in my part time job is sweet fa, its just over $20 a week i think from memory. & i'll get the tax credit & the grand a year plus a subsidy on the admin fees.

So me & my partner are both joining, we'll take 5g each to put towards our 1st house, plus our other savings.
The figures were released the other day on what value house you can buy $400,000 for Auck city, Nth Shore, & Queenstown lakes; & $300,000 for the rest of the country (id add perhaps 20-50k to both those by 2010 when you can 1st buy a house with the subsidy) & for 1 or 2 people you can earn a combined income of $100,000 or upto $140,000 for more than 2 ppl.

We worked it out & with the average salarys we're both gonna earn after graduation we'll have 800-900k each by the time we're 65, plus what ever else we have as investments.

By the time i retire, i expect the age still to be 65, but govt super will be equivilant to the dpb dole etc. Cause there's no way it can stay as it is without the govt going bankrupt or taxes being 70%+
& if i want to retire at like 50-55 i'll just use my other investments to live off.

I think its a great idea personally, perhaps the wrong way to get our savings level as a country up, but hey at least its a start.

[snwtoy]

From what they said today, it was a lump sum payout, but there will perhaps be an option for a drip feed option, but as it stood now from my understanding the plan is a lump sum.

True, my information was 2 weeks old. That's one of the things I don't like ... there are so many factors not finalised yet.

[sergei]

Here is my irrational thought,
My grand dad used to have equivalent of 600,000USD in his soviet savings account. When soviet union collapsed he ended up with equivalent of 60USD in that account. He could not pull all the money out before (soviet savings scheme prohibited it).
So what if the body you choose to invest with goes bankrupt? You say hey anything can go bankrupt - but the problem here lies in being forced with 1 "provider". If I smell something fishy, normally I could pull all money out and use other bank. But not in this case.
65 is long way to me to live. I might not survive that long. Maybe when I will be 65 those money will not mean anything, either way I should have option of managing myself.
My problem with government schemes, that they can choose to "write off" stuff at their will.
All of your base are belong to us.

[Mr Revhead]

from what iv seen its not a bad thing
just it should be th eonly thin you rely on....

my plan is kiwisaver so when i retire i get the pay out to boost whatever else i do.

sergei, you can switch provider any time

[B ROWDY]

I aint touching this shit with a barge pole, they can go choke, Im a keeping my moolah where I can see it and touch it

[DeeCee]

i'll make more on personal investments and have access to money when i need it instead of having it tied in and a large part inaccessible till 65.

personally, if the govt is only going to kick start with $1k and a tax credit of $1042 a year, then its pretty much neglible based on what i currently earn and my incentive is only to match what the govt provides ie $2042 = $2042 for the first year. (please note that the tax credit is up to $1042 for the year.. its not guarenteed that you'd get all of it..)

sure there is the first home incentive - but that has criteria attached as well and its only $5k which, with say a median home value of 400k, is only 1.25% contribution.

to me its just not worth it. and i don't like the %. I'd rather see a dollar figure attached (i'm an IT contractor, so work and $ i get fluctuates dependant on what i'm doing at the time and the employer contributions situation is a bit of a mare)

The default providers are pretty solid so your money is reasonably safe, but doing an automatic payment to another savings account is just as easy and its accessible when i need it.

What i need to find out is whether you can join, get the kickstart and then opt out within your 8 weeks allocated time and come away with the 1k and whatever money you've put in. Now that is an easy buck.

[Mr Revhead]

i'll make more on personal investments and have access to money when i need it instead of having it tied in and a large part inaccessible till 65.

and thats the attraction for me...... if i can get into it.... i will!
*sees new flash racecar bits*
"ohhhhh shiney!!"
*spend*

fast forward 30 years.....
living in the gutter!

[DeeCee]

i'll make more on personal investments and have access to money when i need it instead of having it tied in and a large part inaccessible till 65.

and thats the attraction for me...... if i can get into it.... i will!
*sees new flash racecar bits*
"ohhhhh shiney!!"
*spend*

fast forward 30 years.....
living in the gutter!

lol - i have a couple of different accounts.. and when i need to, i access them. But overall, they still keep going up in dollar figure and that just says that i can save and still live and spend without touching savings for the majority of the time.

budgeting and not wanting everything immediately helps. I hate credit and HPs so they get paid off pretty much ASAP.

Also, for those that are interested in joining KS, check out the different types of scheme providers and their backgrounds for those that are interested. ING CEO marc Leibermann picked up on Gareth Morgan and his kiwisaver scheme and pointed out various inconsistancies.

http://www.nzherald.co.nz/section/3/sto ... 964&pnum=3

Last thing before i get back to work, diversify and spread your investments. Never depend on one thing to be your mainstay (which numerous people who are looking at kiwisaver will no doubt intend).

The money figure represented at the end will have to supplement and sustain any activities you have, 65 and onwards. Think medical bills, cost of living and whatever else you may do when you are old and wandering around thinking of things to do.

We live longer than we did a long time ago, so expect to live to say a median of 80 or more. And according to this dinky ING retirement calculator i have next to me (workmate dropped it on my desk lol 5 minutes ago) here is the break down of figures

Age: 30 (in a couple of weeks at least)
$: we'll say the average median income - $40k
and we'll say a 30 year cycle of saving

from the ING calc:

@4%: 30 years: 137k

@6%: 30 years: 194k

@8%: 30 years: 279k

Break down into 15 years and then into weeks:

@4%: 137/15 = 9.13k, 9.13k/52 = $175 per week extra

@6%: 194/15 = 12.93k, 12.93k/52 = $248 per week extra

@8%: 279/15 = 18.6k, 18.6k/52 = $357 per week extra

now looking at the figures - it appears to be okay. But one can never guess the cost of living in the future, what future govt's will decide or if fund management companies will crash or not. Its all a lot of crystal ball gazing and if you are set on KS, then you'll have to do more research and understand a lot more of what will be involved before putting pen to paper.

Now - the govt is going to come into a heap of money.. but where will they spend it is the next question.
Take for instance, the australian schemes and the compulsory savings they have there.

Australian govt is sitting on 3 trillion dollars and is looking to invest it and that is only after 10 years. You have to wonder what NZ will sit on and what will be done with the money! And it will always change with whoever is in power.

Now back in the 80's muldoon changed laws, accessed the super money and we got a couple of dams, marsden point etc. he re-invested back into NZ infrastructure and NZ went up one step

But considering the lack of financial confidence of Labours previous budgets, what can we expect if they stay in govt and have this little nest egg sitting there waiting to be used? What will happen, when will it happen and what abuses of the money we entrust into the govt will happen (and it will happen).

so - for those keen on KS or looking at it, take a broader perspective and see where it takes you. You can never be admonished for asking good questions

DC

[pc]

We had an accountant come around to work today and we had to have a nice big meeting about how great Kiwisaver is and how by the time Im 65, Ill have $450,000. There was also various yawns from around the room. Will you be joining Kiwisaver? I am going to in 6 months when i turn 18, because at the moment the government wont put the $1000 into my account as a start off, because im not 18.
Your thoughts!?

What will $450K be worth in 45 years? lets look back 45 years (1962)... and average houses were, dunno, lets say $10k and a house costs $300k now, so your money will be worth 1/30th what it is now...
so you will retire on equivilent $15k todays money.
None of this factors interest or salary rises in... but that's not known. Has anyone published the interest figures for these 'investments'?