kiwisaver

KiwiSaver: Have the Conversation

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Is your KiwiSaver working as hard as it could for you? Is it time to tweak the dials to maximise your investment or make things more conservative?

 

KiwiSaver is a voluntary savings scheme set up by the government to help New Zealanders save for their retirement. You can choose to contribute 3, 4 or 8 per cent of your gross (before tax) wage or salary to your KiwiSaver account. Your employer must contribute as well—at least 3 per cent of your gross salary.

 

There are a few instances when you can use your KiwiSaver before retirement—these are known as “time horizons”.

 

It could be for:

·      your first home (where you can withdraw all but the $1000 kick start),

·      perhaps you’ll be emigrating (there are some timeframes around when you can take that money out),

·      severe hardship (let’s hope it doesn’t come to that), or

·      when you reach 65 years of age.

 

The key here is to ensure that your KiwiSaver is on track to maximise your return in the time between today and when you’re going to withdraw the money (time horizon).

 

There are several different funds you can invest your KiwiSaver in. These are generally classified as either conservative, balanced and growth or variations of these. You do need to have all of your sum in one classification. You can choose to split a percentage of “units” across a number of different funds (i.e. from a low-risk to a more aggressive fund). For example, you might put half of your savings in balanced and the half in growth. And it’s not a set-and-forget scenario—you can move these percentages around to suit your goals and life circumstances.

 

The investment statements must be provided to you prior to you signing up to KiwiSaver. You can of course do some of your own research. This could be looking at the Sorted website to compare some funds (see who has the best returns, lowest fees, and who invests in socially responsible sectors and so on).

 

The government’s KiwiSaver website provides forms and tools to get things set up, to keep track of your contributions or to help get your money out.

 

There are a number of different levels of advice that you can receive, from “information only” to “class advice” where the representative will outline what is suitable for people in your group or “class”. For example, “we recommend people aged 30 to 45 choose ABC fund” through to personalised advice where the investment structure is tailored to your personal situation.

 

The advice piece is crucial.

 

So many Kiwis are not close to their next time horizon where funds will be withdrawn, and they are sitting in a default fund—where their KiwiSaver is just ticking away and the potential for a larger KiwiSaver balance is not being realised.

 

When’s your next KiwiSaver time horizon? Is it time to have a chat about getting the most from your KiwiSaver?

 

Simon O’Neill is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Is my ex entitled to a portion of my KiwiSaver after separation?

Question:

I have a couple of friends working through the process of separating from their long-term partner. Are they right in thinking they are able to lay a claim to half of a KiwiSaver or retirement fund balance because their partner was contributing to the scheme while we were together?

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The answer is yes.

 

KiwiSaver funds are relationship property, and up for division in a split when they are acquired during your de facto relationship or marriage. This is the case irrespective of whether the funds came from individual, government or employer contributions.

 

However, the portion of your KiwiSaver that was acquired before your de facto relationship or marriage started is protected. This is treated as separate property. This means that only the portion of your KiwiSaver that arises from contributions during the relationship/marriage will be divided equally between you and your spouse as relationship property.

 

For example, if Tom and Mary separate and sell their family home, Tom may take a lesser share of the sale proceeds for the home but keep his KiwiSaver while Mary takes a higher share of the sale proceeds to compensate her for her interest in Tom’s KiwiSaver.

 

If that is not possible, a court order can be sought to direct that the KiwiSaver scheme pay out a portion of the balance to the former spouse.

 

Remember that KiwiSaver comes with unique complications. Accessing the money immediately is not usually possible, as it may be ‘under lockdown’ until someone turns 65.

 

Divorce or separation can be a very costly and emotionally draining exercise if your split is not amicable. Unfortunately, this is mostly out of your control!

 

Adapted from Stuff https://www.stuff.co.nz/business/95163061/ask-susan-what-happens-to-kiwisaver-in-a-breakup

 

 

Debra Halton is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.

What's up with the banks?

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It’s 2018 and change is afoot in the banking world. But, don’t worry, we can also expect much more of the same, says Graham.

Firstly, all banks are now lending at 65 per cent on second-hand investment property. This increase came about on 1 February and certainly helps if you are wanting to build a portfolio. Second, it’s good to note that all banks are also lending up to 85 per cent on new build investment properties. Remember, a second-hand property (by the reserve bank rules) is any property that has had a code of compliance for six months or more.

Apartments .... We have one bank in New Zealand who won't lend at all on off-the-plan apartments and another who will go to 85 per cent. Please notice I didn't say who ... ring us and find out.

Another point of interest in the banking landscape is that, in 2018, we will see a continued exit of banks from giving advice in the investment and insurance space. There is big pressure building in Australia for banks to act in the best interest of their clients which is difficult to do when you only have your own products to wedge clients into. This pressure will continue to flow through to the New Zealand subsidiaries. This will have implications for KiwiSaver as well (for example, ANZ, strangely as New Zealand’s biggest bank, is also our biggest manager of KiwiSaver funds).

This news on investment and insurance advice is good news for Velocity and all other independent financial advisers. Our place with multiple product suppliers is what will continue to be demanded and expected, not just by the market, but also the regulators.

 

Graham Goodisson

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.