Frequently Asked Questions |
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Who should join KiwiSaver?
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Should I join KiwiSaver?
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What’s the catch?
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How much should I save?
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Will my employer match my contribution?
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If I join KiwiSaver, which KiwiSaver provider should I use?
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Can I change my KiwiSaver Provider?
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Which KiwiSaver fund will perform best?
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What are the fees?
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How do I join Civic's KiwiSaver?
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Where do I find Civic's KiwiSaver application form?
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How do I arrange for my KiwiSaver contributions to be paid?
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What’s the ‘Prescribed Investor Rate’ on the application form?
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Who are the other KiwiSaver Providers?
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What’s wrong with using a default fund of a ‘default provider’?
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Is it true that there is no government guarantee for KiwiSaver?
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Could Civic's KiwiSaver turn into another Bridgecorp?
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Should I get independent advice?
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I’m in a superannuation scheme already. Should I transfer my balance to Civic's KiwiSaver?
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What happens to my money when I die?
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What makes Civic's KiwiSaver extra flexible?
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Can my partner/children/great great grandmother sign up for Civic's KiwiSaver?
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Where can I get more information about KiwiSaver and Civic's KiwiSaver?
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Who should join KiwiSaver?
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Those who hope to buy their first house in three or more years time, those near 65 who are saving anyway, and just about everyone else in between.
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Should I join KiwiSaver?
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If you are between 18 and 65 you could put $1,000 into KiwiSaver and straightaway have $4,000. That would be made up from your $1,000, the kick start that everyone gets of $1,000, a KiwiSaver tax credit of $1,000, and $1,000 from your employer. There is more to KiwiSaver than this of course, and for a longer answer click here.
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What’s the catch?
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Once signed up to KiwiSaver you cannot opt out (but you can take contribution holidays) and mostly you can’t touch your savings until you get to retirement age (currently age 65). However, having your retirement savings ‘locked-up’ is not necessarily a bad thing!
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How much should I save?
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The other side of this question is ‘how much should I spend?’, and this probably has a different answer to how much you would like to spend! Ask yourself what you need/want now and what you need/want in retirement? To help you with this, try www.sorted.org.nz, a website provided by the Retirement Commissioner. It is not just a question of whether you can afford to save, but whether you can afford not to save.
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Will my employer match my contribution?
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From 1 April 2009 every employer is required to match employee contributions for KiwiSaver at a level of 2% of gross salary.
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If I join KiwiSaver, which KiwiSaver provider should I use?
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There are over thirty KiwiSaver providers to choose from and it is up to you (not your employer) to choose the one you want. For the record, the writer of this piece has signed up to Civic's KiwiSaver scheme, as has his wife and children.
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Can I change my KiwiSaver Provider?
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You can change your KiwiSaver provider at any time and as many times as you like. The only rule is that you can only have one KiwiSaver provider at a time. To change there is no need to tell your employer, you just apply to your new provider.
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Which KiwiSaver fund will perform best?
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No one knows, because historical returns of an investment fund or an investment manager are not a good guide to the fund’s or investment manager’s future investment performance. However, and averaged over a reasonable period, returns on ‘balanced’ funds are expected to be of the order of 5% pa after tax and fees. The corresponding number for ‘income’ funds is 3% to 4% pa and for ‘growth’ funds is 6% to 7% pa.
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What are the fees?
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Each KiwiSaver scheme will have its own fee structure. For Civic's KiwiSaver scheme there are only two sets of charges; a fund management fee of 0.5% pa ($5 per $1000) and an administration fee of $4.50 per month. We have no set up charge or switching fee and unlike many other KiwiSaver schemes pay no agent commission or joining fees.
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How do I join Civic's KiwiSaver?
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Click here
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Where do I find Civic's KiwiSaver application form?
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Click here for the application form if your KiwiSaver savings are going to be deducted directly from your salary by your employer, and click here for an application form if you don’t have an employer.
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How do I arrange for my KiwiSaver contributions to be paid?
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Click here for a payment form to complete and give to your employer (if you have an employer). If you don’t have an employer or you just wish to pay some extra, you do so by paying the IRD directly. The easiest way to do this is internet banking using the tax code KSS, but you can also do it over the counter at any Westpac Branch using an IRD payment slip and tax code ‘KSS’. The paying in slip looks like this: click here.
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What’s the ‘Prescribed Investor Rate’ on the application form?
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Investment earnings from your KiwiSaver account will automatically have tax deducted from it at a rate of 30% unless you advise your KiwiSaver provider that your ‘Prescribed Investor Rate’ (PIR) is 19.5%. Generally, this means that 33% and above tax payers will have a PIR of 30% and the rest also including many 33% tax payers will have a PIR of 19.5%.
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Who are the other KiwiSaver Providers?
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There is a list on the IRD KiwiSaver website.
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What’s wrong with using a default fund of a ‘default provider’?
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Nothing at all if that is what you want. However, the default funds of the default providers are mandated to be invested very conservatively, and that could reduce your average net return when compared to investing in a growth fund by 3% pa. Now, 3% pa may at first not seem much, but when repeated year after year the effect builds up. Thus $10,000 invested for 30 years at 4% pa would be worth $24,273, whereas that same amount invested at 7% pa for 30 years would be worth $76,123, which is more than three times as much.
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Is it true that there is no government guarantee for KiwiSaver?
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There is no government guarantee for any of the KiwiSaver providers, so investors in Civic's KiwiSaver will be comforted to know that the Auditor General is responsible for its annual audit and that SuperEasy KiwiSaver has six independent trustee directors – five appointed by local government and one by the CTU. These directors have access to and employ independent actuarial and investment advice and use a range of professional fund managers (currently AMP Capital Investors (NZ) Ltd and ASB Group Investments Ltd) for managing the investments.
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Could Civic's KiwiSaver turn into another Bridgecorp?
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Investors in Bridgecorp are expected to lose some or all of their investment. However, if something similar happened to an investment made by Civic's KiwiSaver the Scheme members would lose on average less than 1% of their investment. This is because Civic's KiwiSaver through its fund managers is investing in over 1,000 different companies. Risk is never eliminated, but it can be diversified.
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Should I get independent advice?
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If you can find it, yes. But be warned that some ‘independent advisors’ would never recommend Civic’s KiwiSaver because Civic’s KiwiSaver does not pay commission. Civic Assurance is owned by local government for local government, so while not claiming to be totally independent, we are genuine in our endeavours to give local government staff the best KiwiSaver product we can. Luckily for non-local government staff, they can be members of Civic's KiwiSaver too.
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I’m in a superannuation scheme already. Should I transfer my balance to Civic's KiwiSaver?
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Every case needs to be considered on its merits, but our general advice is to leave whatever superannuation savings you already have where they are, but to direct new savings at either 2%, 4%, or 8% of your salary into KiwiSaver. It is quite permissible (if you can afford it) to be contributing to more than one superannuation scheme, but note that you can only get the KiwiSaver tax incentives from one scheme at a time.
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What happens to my money when I die?
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The same as to what would happen to any money you had in a bank account when you died. It will form part of your estate. We suggest if you have not already done so that you write a will, and if your circumstances have changed since your last will was written that you write a new will. Note: on getting married, any will you previously wrote is automatically revoked.
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What makes Civic's KiwiSaver extra flexible?
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Civic's KiwiSaver is one of two SuperEasy schemes both within the same trust. The other one is called SuperEasy. This allows members employed by a qualifying employer (basically within local government) extra flexibility with how much of their savings are locked in and to what extent they are relying on the IRD to collect their savings. SuperEasy is not open to the general public, but Civic's SuperEasy KiwiSaver is SuperEasy. Both SuperEasy schemes use the same investment funds with the same low management fees. To see how you can structure your retirement savings according to your needs and circumstance click here.
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Can my partner/children/great great grandmother sign up for Civic's KiwiSaver?
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Yes, yes and probably no – you need to be under 65 to sign up for KiwiSaver. Note also that you need to be over 18 to qualify for the tax credit of $20 per week. To see how you can do this click here.
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Where can I get more information about KiwiSaver and Civic's KiwiSaver?
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You can get more information about KiwiSaver from www.kiwisaver.govt.nz, and more information about Civic's KiwiSaver from www.supereasy.co.nz.
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