KiwiSaver scheme, the poll

**The Pastor** · 8th June 2007, 11:22

If the government doesnt pay out, or at least refund my money, i'd take them to court!

**davereid** · 8th June 2007, 11:23

For many of us, Kiwisaver will either be useless, or delay retirement.

Why ?

We are seldom the same age as our partner.

Assume you are 10 years older than your wife.
When you turn 65, you are eligible for NZ superannuation ("the pension"). Your wife is not, but she can be included in yours, and you will take home $406.44 weekly as superannuitants.

But you have both contributed to kiwisaver.

Problem 1.
You are BOTH on the pension, but your wifes money remains tied up until she qualifies.

Problem 2.
Any income over $80 gross per week reduces your pension by 0.70c per dollar. So not only will you pay tax on the interest you earn on your kiwisaver investment (at 19%-33% depending on your income), you will also effectively lose 70% of your pension. So your Kiwisaver investment will not actually improve your lifestyle in any major way, as 89% of its returns vanish in tax, and pension reductions.

So, you WILL have a nice nest-egg. But it is so heavily taxed that it will be of no value to you. (Until one of you die !)

Better you spend the $8k per year that you were going to put into Kiwisaver on wine women and motorcycles, than waste it in kiwisaver!

**Oakie** · 8th June 2007, 11:26

One point people. It's not the government that holds the funds. The funds are manged by the sort of companies that have been managing retirment planning for years. The government only extracts the money from the employer via the IRD and passes it onto those approved scheme managers.

The http://www.sorted.org.nz/ site is useful and their Kiwisaver calculator is a handy wee thing for demonstrating what you get for what you give. In my case, $33000 in and $115000 return based on my age, and salary. I contacted them a few days ago to find out what assumptions the calculator uses incase they were a bit optomistic but the reply was that is assumes a growth of 2.5% p.a. (return on the money invested) and inflation of 2% p.a. which I think is fairly conservative overall.

I'm going to get into it but not straight away. I'll wait until my next pay-rise comes through and do it atthe same time so I won't feel the bump too much.

**Hitcher** · 8th June 2007, 11:29

None of the money collected for the KiwiSaver scheme is collected on your behalf by Government nor resides in Government coffers. You will choose your preferred scheme provider, advise your employer of that organisation and your and your employer's contributions will be deposited in that scheme.

One of the criticisms of KiwiSaver is that none of these privately-managed funds are Government guaranteed i.e. if your fund manager makes dodgy decisions or goes tits up, then that is your hard luck.

**Oakie** · 8th June 2007, 11:50

Originally Posted by davereid

Problem 2.
Any income over $80 gross per week reduces your pension by 0.70c per dollar. So not only will you pay tax on the interest you earn on your kiwisaver investment (at 19%-33% depending on your income), you will also effectively lose 70% of your pension. So your Kiwisaver investment will not actually improve your lifestyle in any major way, as 89% of its returns vanish in tax, and pension reductions.

I don't think that's correct. The payment of your savings is not automatically paid as a pension but is paid in one lump sum when you turn 65 and you can do what you like with it. Overseas trip, new car (I mean Bike), hip transplant, penis extension etc.
You'd only be penalised on the interest the lump sum earns if you invest it instead of spending it. That assumes that you pop the payment in the bank with the purpose of earning interest and not drawing on the lump sum.
As far as the lump sum is concerned, it's an asset, like a house and owning a house does not reduce your pension.
I think in a few years you're going to see a lot of 65 year old Harley riders around. (HD might have to adapt the NZ models to provide Zimmer frame storage).

**James Deuce** · 8th June 2007, 11:56

Originally Posted by Hitcher

None of the money collected for the KiwiSaver scheme is collected on your behalf by Government nor resides in Government coffers. You will choose your preferred scheme provider, advise your employer of that organisation and your and your employer's contributions will be deposited in that scheme.

One of the criticisms of KiwiSaver is that none of these privately-managed funds are Government guaranteed i.e. if your fund manager makes dodgy decisions or goes tits up, then that is your hard luck.

IRD can recall the Government contribution any time they want.

**ManDownUnder** · 8th June 2007, 11:57

It's asking me to put a lot of my money into a scheme that relies on 3rd party investment houses, and lock it up until I'm 65.

It's a complex system that is going to have a couple of unexpected benefits/shortcomings when the clever dick accountants try to manipulate it in their own best interests.

It may be a good idea, but there are too many moving parts beyond my control right now so I'll take my normal "slowly as she goes" approach to this stuff. Others can step in, suffer the shortcomings and corrections, and if/when if proves a worthy investment vehicle... I'll be in.

Much like a Windows upgrade. Don't do it till SP2 is released.

**Karma** · 8th June 2007, 12:01

I think the workers in the UK would tell you that pension schemes are inevitably flawed... you NEVER get out what you put in, so why bother.

Me personally... I'll just open up a (relatively) high interest savings account and have some of my wages automatically transferred there every month... just means I've gotta be careful about not dipping into it.

On a side note... why would you want to retire anyways? Retirement means death you know... you just wither up and die.

**Oakie** · 8th June 2007, 12:13

Originally Posted by ManDownUnder

Much like a Windows upgrade. Don't do it till SP2 is released.

Dammit! I was just going to say that.

**Arthur** · 8th June 2007, 12:14

I'm not too keen on the idea, but that stems more from the fact all members of the Defence Force are required to be part of the Defence Force Super scheme. If we choose to go with KiwiSaver, it is in ADDITION to the standard super scheme we have. It may not make much difference to how much we get in the hand each fortnight, until you take into account that the majority of us are on a reasonably low salary.

**Checkers** · 8th June 2007, 15:37

whats the deal with kiwisaver and why is it in the poll?
someone fill me in?

**inlinefour** · 8th June 2007, 15:59

Originally Posted by Grahameeboy

But people get Super so what makes you think this is a stitch up by the Govt?

By the time I get to retirement, super will long since be a thing of the past. Anyone who disagrees would be considered delusional...

**KATWYN** · 8th June 2007, 16:03

Originally Posted by renegade master

If the government doesnt pay out, or at least refund my money, i'd take them to court!

Originally Posted by inlinefour

By the time I get to retirement, super will long since be a thing of the past. Anyone who disagrees would be considered delusional...

Yea along with the Kiwisaver scheme, funds and all.

**avgas** · 8th June 2007, 16:39

I think its a really nice way for the govt to say....."HAHA fuck you! you thought you could get money from us when your 65...."
The govt has screwed me enough for the first 25 years. Thanks to the student loan scheme i will be screwed for the next.....now its guaranteeing that the last will be screwed without my intervention.
I wonder if i can leave something like "all my money to go to anti-beehive suicide bombers" in my will.

**Oakie** · 8th June 2007, 18:27

Originally Posted by Checkers

whats the deal with kiwisaver and why is it in the poll?
someone fill me in?

It's a voluntary retirement savings scheme initiated by the government effective 1 July this year. Employees put in 4% or 8% of their wages and employers contribute also, starting at 1% from 1 April 08 and increasing to 4% from 1 April 2011. The government also puts in $1000 at the start and puts in about $1000 per annum.The funds are passed to approved retirement plan providers and proceeds paid in a lump sum when the person reaches 65 years of age.