10 Years of KiwiSaver: More answers to your questions
As KiwiSaver turns 10 years old, we’re taking some time to help Kiwis understand how choices made today, can make a big difference to the future.
We’re excited to see so many kiwis interested in how KiwiSaver can help with their future. With such an overwhelming response to our Facebook Live Q&A, we didn’t want to leave you hanging.
Be sure to watch the full Q&A below, with Aidan Vince, Rebecca Drummond and Jonathan Beale from the ASB Wealth team. They give some great information around the importance of your choice of fund and your contributions, as well as making the right decisions for your future, today.
While we didn’t have time to get to every question during the stream, we’ve pulled out a few more that came up during the Q&A to answer here:
How to get the most benefit from KiwiSaver for buying my first home?
As Jonathan Beale mentions, “KiwiSaver is one of the best ways to save for your first home.” If you have been a KiwiSaver member for 3 or more years, you can withdraw everything (your contributions, employer contributions and Government contributions). You just need to leave a balance of $1,000 after the withdrawal, as well as any amount transferred from an Australian complying superannuation fund.
Your fund selection and contribution amount are the two main choices to think about when you’re looking at using KiwiSaver to buy your first home. You can use our online KiwiSaver Calculator to work out how much you could have when it comes time to buy, and it can be surprising to see how much extra you can save when selecting different contribution levels. It’s important you select a fund that suits your savings goal and investment timeframe. Use our Help Me Choose Tool to see which fund we recommend if looking to use your KiwiSaver savings to purchase your first home.
You can also make extra contributions via FastNet Classic, and it can be great to have this money saved away so you can focus on your goal. As Jonathan added, “it’s your money, but it’s away from temptation. The more you put in, the more it grows.”
If you’re thinking of using your KiwiSaver savings to help buy your first home, talk to us early and we can help you out.
Can you join KiwiSaver at any stage even if you initially opted out?
Yes! If you initially opted out (after being automatically enrolled when starting a new job), there’s nothing stopping you from signing back up. You can join directly with a KiwiSaver provider by completing an application form or talk to your employer. You can find more information about joining the ASB KiwiSaver Scheme here.
What guarantees do we have that our money will be safe by the time we retire?
While the Government may make small changes along the way, as it has in the past by removing the $1,000 kick-start, and raising the minimum contribution level, it’s in the country’s best interests for everyone to be saving more for their own retirement. As Jonathan puts it, “there are 2.7 million Kiwis signed up to KiwiSaver, which is a lot of voters.”
Adding to this, “the difference with KiwiSaver to some historical superannuation funds is that it’s your money, and it’s held in a trust account in your name with the provider’s supervisor. This means if a KiwiSaver provider’s business were to fall over, your investments wouldn’t be affected. You contribute, as well as your employer and the Government and it’s your savings, to help you into a first home or to have a better quality of life in retirement.” – Rebecca
If I up my percentage contribution to 8%, can I change it back down to 4% later?
You can change your contribution level once every 3 months or sooner if your employer agrees to this. We suggest you speak to your employer about how best to do this.
Changing your contribution level should reflect your goals, and how much you can afford. Use our online KiwiSaver Calculator to see how your outcome can change depending on your contribution level.
Aidan gives the example of a 30 year old earning $50,000 a year with $20,000 in their KiwiSaver account today. They could save an extra $30,000 for their retirement just by switching from 3% to 4%, an extra cost of around $9 per week. Take a look at our calculator and see how the changes you could make today will affect how your future looks.
Can my fiancé and I use both our KiwiSaver balances to buy a first home, or can we only use one?
Yes, you can both withdraw your money from KiwiSaver to go towards your first home. You'll need to leave a minimum balance of $1,000 in your KiwiSaver account, as well as any amount transferred from an Australian complying superannuation fund. Just make sure you allow some time to let your provider know you are going to do this, rather than on the day you settle. It takes around ten working days to process a KiwiSaver first home withdrawal application.
I'm a sole trader, and make voluntary payments every week. How much should I be putting in to make sure I get the full annual Government contribution? I'm 52yrs old.
This is a great question, and as a sole trader it’s great to be contributing weekly to make sure you contribute enough to get the maximum annual Government contribution of $0.50 for every $1 you contribute, up to a maximum of $521.43.
This means that you’ll need to contribute $1,042.86 between 1 July 2017 and 30 June 2018. Over the year, this is around $20 per week.
We’ll need to receive your extra contributions before 30 June to make sure they’re in your ASB KiwiSaver Scheme account by 30 June, so it’s a good time to look forward to next year and be prepared.
What factors should I consider when choosing a KiwiSaver provider?
Choosing a provider is an important decision and we recommend you consider the whole package. There are many factors to consider, including fees and fund performance, but also visibility and having access to the right tools to help you get the most out of your savings.
During our Q&A, Jonathan talks about how “it’s not always the cheapest provider that is the best.” ASB has some of the lowest fees in market, and will look to maintain this through our focus on making investment decisions that keep costs as low as possible. However, fees are only one consideration when investing with KiwiSaver - ASB also recognises the importance of providing outstanding customer service and great tools that help you get the most out of KiwiSaver. These include our online KiwiSaver Calculator, great visibility of your balance in FastNet Classic and on the ASB Mobile App, as well as easy ways to change fund and make extra contributions.
Knowing where your money is invested and being transparent is also important to us. You can find the full list of companies that we invest in under “Full Portfolio Holdings” here.
We’re proud to be the KiwiSaver category winner of the 2017 Morningstar Awards New Zealand*, for providing the best solution for New Zealanders' retirement savings needs through a combination of performance, fees, investor experience, transparency and disclosure.
Will KiwiSaver affect my NZ Super?
As Rebecca mentions, “NZ Super is a universal scheme and not currently means tested. KiwiSaver is there to compliment this. What it means is that your KiwiSaver balance is adding to your superannuation income. It’s there to help you have the lifestyle you want in retirement.”
Can I organise a transfer of my KiwiSaver balance from a different provider to ASB whilst living overseas?
Yes, you can find more information in joining the ASB KiwiSaver Scheme here.
Can I withdraw some of my money to help out with my holiday?
No. You can only withdraw KiwiSaver savings under limited circumstances such as for your retirement, or for helping you get into your first home. Other reasons can be found here.
Look out for more in our 10 Years of KiwiSaver blog series.
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The content discussed here is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial advice. As individual circumstances differ, you should seek appropriate professional advice.
Interests in the ASB KiwiSaver Scheme (Scheme) are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides Scheme administration and distribution services. No person guarantees interests in the Scheme. Interests in the Scheme are not deposits or other liabilities of ASB. They are subject to investment risk, including possible loss of income and principal invested. For more information see the ASB KiwiSaver Scheme Product Disclosure Statement available from ASB’s website and the register of offers of financial products at www.business.govt.nz/disclose (search for ASB KiwiSaver Scheme).
*Morningstar Awards 2017©. Morningstar, Inc. All Rights Reserved. Awarded to ASB Group Investments Limited, KiwiSaver Category Winner, New Zealand.