KiwiSaver turns five
Sun, 01 Jul 2012 6:19p.m.
By Tony Field
It's KiwiSaver's fifth birthday, and that means some people will be able to start taking their entire savings out of the scheme.
To do so you have to be 65 or older, and must have been in KiwiSaver for the full five years.
Sheena and Terry Wilson signed up for KiwiSaver on day one.
Five years later, they're glad they did.
“I have got money now that I otherwise wouldn’t have had,” says Sheena Wilson.
What has really boosted their returns has been the Government's $1000 kick-start, plus annual tax credits.
“The Government subsidy is the spectacular bit for us,” says Terry Wilson. “But when you get past that point and you look at the performance of the fund after the subsidies cease, I’m a little disappointed.”
The Wilsons are among 17,500 people who over the coming month become eligible to withdraw all their money from KiwiSaver.
“They have to have been a member of KiwiSaver for five years, and they have to be eligible for New Zealand super,” says financial planner Deborah Carlyon. “Now at the moment, that's age 65.”
Those investors will join 7000 people who have already withdrawn money to buy their first home.
It's likely someone who has saved 2 percent of their income since the start of KiwiSaver now has a nest egg of at least $11,000, if they received a matching employer contribution.
They can withdraw the lot, some if it or leave it all in.
“They might want to keep contributing, but once they're eligible to withdraw, their employer doesn't have to contribute and the Government contribution stops,” says Ms Carlyon.
Withdrawing their money will take around a week, as fund managers need to process a withdrawal form witnessed by someone like a Justice of the Peace.
The Wilsons will take their money out to put into another investment, but say everyone should sign up for KiwiSaver.
“New Zealanders need to save for their retirement,” says Mr Wilson. “If you think you are going to retire on the pension alone, you are very much mistaken. Even 2 percent putting into KiwiSaver is utterly inadequate. You should be aiming to save somewhere closer to 10 percent."
“It's starting your kids off with pocket money and saying one-third of this goes into your bank, and encouraging them to start thinking about how you can start saving for things,” says Ms Wilson.
The Wilsons say the sooner people get into the savings habit, the happier they'll be when they become eligible to take their money out of KiwiSaver.
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2/07/2012 1:51:42 p.m.
Kiwi saver is one of the best deals going as saving is so important.
I came from the UK and do know what I am talking about!
In 1948 the UK brought in the national health/pension scheme but later on it came into trouble being that the health,pension schemes were not coping.
They tried to prevent this later in years but too late.
Many people in the 80's started to opt for private pensions but still little was done for those who couldn't afford them.
Money got swallowed up with the health side and sadly the pension like here now cannot cope.
What this country has done has brought in the Kiwi saver and thank goodness now the people can save and see where their monies is going.
After many years working in the UK I get £400 each quarter of the year pension since I knew nothing of the stumbling blocks on the way.
So all you Kiwi's out there be thankful just for once that this scheme has been thought out so well and use it to your advantage.
Because it is a good scheme as the governments cannot manage now with the whole deals that once were fore -casted.
For once you have the upper hand to the UK just keep it that way.
2/07/2012 12:03:01 p.m.
pitty the ex train driver prime ministers super scheme was not kept going for all us older people the scheme needed modifing not throwing totaly out guess who the smart gvt was that re instated it 30+ years later
2/07/2012 10:23:34 a.m.
Without the Govt contributions it is basically a waste of time in the short term, long term the jury is of course still out, but the big winners are the scheme runner who takes his fee's no matter what the return performance, and the Govt with the tax take, which is in turn clawing back the tax credits, but the actual return on the actual investment is deplorable!! I think without the Tax credits we would be in negative teritory.
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