Kiwisaver is not just yours! BEWARE!

[davereid]

even if my fund provider has a -5% return, the overall return is many times the benefit of putting that money towards the mortgage.

Your sums look great at small contributions. But things go pasty very quickly with even moderate inflation.

Except that its likely that your house is going up in value at a rate significantly faster than the rate of inflation.

And you have to live somewhere. Contributing to your mortgage is therefore not "dead" money, you will either be doing that or paying rent.

Take the following :

The following assumptions have been made in this calculation
You will be in Kiwisaver for 40 Years
Your commencing annual pay before tax is $26000
You contribute 2% of your pay, and your employer contributes 2%
We expect annual inflation of 4%, and wage growth of 4%
You will pay fees of 0.2% of your fund balance every year, and your PIE Tax rate is 21%
You have a start balance of $1000 from the Government.
You also get your contribution matched by Government to a max of $1024 a year.
You will pay Tax on your PIE

EDIT.. Bloody hard to read the printout as KB has removed line tabs... but it can be followed with a bit of care.

Year 1 and 2 look very much like your calculations :

Year 1 calculation :
Year 1 Gross Pay is $26000

CREDITS DEBITS BALANCE
Start Balance $1000
Your Contributions $520
Your Employers Contribution $520
Your Governments Contribution $520
Fund Growth ie interest earned $71.2
Fund administration Fees $2.14
Tax at PIE Rate on interest earned $14.5
Your New Balance $2614.55
Real Balance after adjusting buying power for inflation $2509.97
---------------------------------------------------------------------------------------
Your END OF YEAR 1 KiwiSaver Balance in todays dollars $2509.97
---------------------------------------------------------------------------------------
Wage Growth $1040
Your New Gross Pay $27040
Inflation adjustment (adjusts back to your real buying power) $1081
Your New Gross Pay in todays money $25958.4
---------------------------------------------------------------------------------------
Year 2 calculation :
Year 2 Gross Pay is $25958.4

CREDITS DEBITS BALANCE
Start Balance $2509.97
Your Contributions $519.16
Your Employers Contribution $519.16
Your Governments Contribution $519.16
Fund Growth ie interest earned $131.54
Fund administration Fees $5.28
Tax at PIE Rate on interest earned $26.51
Your New Balance $4167.22
Real Balance after adjusting buying power for inflation $4000.53
---------------------------------------------------------------------------------------
Your END OF YEAR 2 KiwiSaver Balance in todays dollars $4000.53
---------------------------------------------------------------------------------------
Wage Growth $1038
Your New Gross Pay $26996.73
Inflation adjustment (adjusts back to your real buying power) $1079
Your New Gross Pay in todays money $25916.86


But by year 40 ( If you get there)

Year 40 calculation :
Year 40 Gross Pay is $24425.56

CREDITS DEBITS BALANCE
Start Balance $47345.79
Your Contributions $488.51
Your Employers Contribution $488.51
Your Governments Contribution $488.51
Fund Growth ie interest earned $1923.14
Fund administration Fees $98.53
Tax at PIE Rate on interest earned $383.16
Your New Balance $50252.76
Real Balance after adjusting buying power for inflation $48242.65
---------------------------------------------------------------------------------------
Your END OF YEAR 40 KiwiSaver Balance in todays dollars $48242.65


I bet your house has gone up in value by more than that.

And I bet you have saved more in interest by paying your mortgage back faster.

[aprilia_RS250]

Kiwisaver IMHO is best avoided, here is my take on it.

The Good.
You get $1000 to start off.
You get an employer subsidy.
You get tax credits.

The Bad
1. There is no guarantee of returns. And I challenge ANY investment advisor to name a fund that has EVER existed that has averaged an inflation adjusted return more than 4% after tax. But you don't have to be an investment advisor to name dozens of investment companies that have gone broke.
2. If you are in the 65% of people who have more than one life partner you will do-half-your-dough
3. While you can take-a-break, the fees don't take one.
4. Kiwisaver changes the age of joint retirement for a couple from when the OLDEST becomes 65 to when the YOUNGEST becomes 65.
5. You can't get the money until you reach the age of 65 (or older if the GMint changes it). So you can't choose an earlier retirement age, even if you have saved millions of dollars.
6. You will have cash-in-the bank at retirement. So if (When) NZ super becomes income or asset tested, you will do-your-dough.

I have written a quick application to allow you to work out your Kiwisaver returns. Its been rushed through.. so bug report if you need to.. I can't post it as its an .EXE but I will email it if you want to find out how rich you wont be.

EDIT - here http://www.eslnz.com/kiwi.zip

Download. Copy to a directory of your choice, and unzip. Run Kiwi.exe and put in the numbers that apply for you.
Cry, if you cannot get out of kiwisaver.

1. Many financial companies that went broke have nothing to do with kiwisaver, many of them took deposits from peoples savings and gave them to shifty property developers.
2. Seems to be sad but true
3. You're still earning returns on your balance hence you should be paying fees
4. Didn't know this...
5. Yes you can, if you're buying your first home, sickness, extreme financial distress.
6. Still not a valid reason not to go into kiwisaver, it's pure speculation.

Have a look at your average aussie how they're set up for retirement. 9% super, which includes 9% from employer, they'll have a very comfortable retirement. One of my mates there told me his super is ~50k, he's only 24. Another 40 years of work that balance should be 7 digits easy.

[avgas]

News that kiwisaver might become compulsory has made me think about things and do a bit of searching... Only searching I ever do involves bikes but this intrigued me.

Just found out if you're in the process of a divorce and your partner has never worked, i.e. they have no kiwisaver they may be subject to receiving half of your kiwisaver balance!!! That's just fucking bananas!

Not letting anyone see my kiwisaver balance, doesn't exist!

Do you have student loan?
Mortgage?
A smart lawyer/Accountant combination will get you off paying anything your not suppose to pay.

They are entitled to half the total value (bottom line). If you have 20K student loan and 10K kiwi-saver..... she gets nothing.

I had a similar predicament while studying with my partner - had 10K in the bank, but 55K student loan. Letter was written up that the 10K was to help pay the 55K student loan (lawyer), the accountant did the balance sheet showing net value of -45K.

Same thing with Kiwi-saver. She can have half - but she has to take half the debt too.
Of course those of you who own a home, have kiwi-saver and have no debt.....your fucked.

I have been with my wife for 9 years now. So if she left and took the money.......I wouldn't give a fuck about the money.

[Pixie]

I love all this "the government pays...."
Your poor fucking fellow taxpayer pays

[JMemonic]

You're thinking about it the wrong way. I'm getting a 100% return on my KiwiSaver contributions because I'm taking what my employer contributes as my return (2% each). Any actual growth on the total is just a cherry on the top. I'd defy you to find any normal investment to match that!

Hmm likening that way of thinking, given the govt contribution and the employers it makes for a great return.

[Swoop]

No. You just need to ensure that your relationships never exceed three years. This includes defacto relationships.

Otherwise the gold-diggers are entitled to take half of your assets.

Damn right.
Get an agreement sorted. IF it turns pear-shaped, that is not the time to be negotiating agreements. People do stupid shit at breakup time.

[p.dath]

as Pdath said - do a contracting out agreement or as I did, a pre-nup.

Is a pre-nup still legally enforceable after the changes to the property (relationships) act?

[hellokitty]

Now THAT got my attention. I am guessing he is open to the IRD taking him down then?

Oh and personally I think KiwiSaver is not for everyone. Take that 2% or 4% and put it towards paying off your mortgage....

the IRD has been informed but it was only a matter of time before they did him anyway

[hellokitty]

Is a pre-nup still legally enforceable after the changes to the property (relationships) act?

We were doing a contracting out agreement but then we got engaged (and married 6 months later) so it was changed to an "agreement for the purpose of contracting out of the property (relationships) act in contemplation of marriage"

My husband felt that my home should be protected and he wanted everyone (parents) to know that.

[pete376403]

Can't help but wonder what state the countries economy would be like now if Muldoon hadn't bribed the electorate with promises of "non contributory superannuation" and wrecked the super scheme that was set up by the Kirk government in 1974.

Hmm, somebody else was wondering the same thing and wrote " This week, a friend gave me a copy of a brilliant piece written by Brian Gaynor and published in the New Zealand Herald almost exactly three years ago. Gaynor regards Muldoon’s abandonment of Labour’s far-sighted and ahead-of-its-time superannuation scheme, set up in 1974, as the worst decision taken by any New Zealand government in the past 40 years.

Muldoon campaigned on abolishing the scheme in the 1975 election. He said it would turn us into a Soviet clone. Hence the Cossacks on television. The Yacht Squadrons reeled in horror.

It worked a treat. Rowling was gone and, true to his word, Muldoon abolished the scheme some weeks later. But what stupidity.

Gaynor works out that if we had stuck with the scheme, New Zealand would now be “an Antipodean Tiger”.

The superannuation scheme would conservatively be worth $240 billion. In other words, we would have savings enough to swim in. We would be flooded with money.

It was a good scheme. Employees and bosses between them put 8 per cent of your gross income into it. Everybody owned their own individual accounts. The scheme had nice flexibility. When you retired you could cash in a sum to reward yourself, take a trip, whatever, but you kept the rest as a pension. Sounds quite modern when you look back.

And that conservative figure of $240 billion, writes Gaynor, would represent 150 per cent of our GDP, whereas Australia’s super scheme represents only 82 per cent of GDP. (Only? We should be so unlucky!) We would have led the world in savings."
http://www.thestandard.org.nz/compul...s-welcome-but/

Just one of the reasons I'll not trust a National government again.

[rustic101]

Just found out if you're in the process of a divorce and your partner has never worked, :

I had to borrow half my GSFs value to pay my ex wife out lol... and the B'arch still got the house - Life aye.

Thats more interesting is that the Retirement Commission strongly advise individuals with debt to pay this off before saving due to interest etc. I would suggest looking at the stats that most Kiwis have large debts and therefore should be paying that off.

I personally am not into forced savings. The Govt are forcing you into an unsecured risk that is not guaranteed or supported. Lets face it most funds are losing money hand over fist.

Personally I tuck my money away each week into Bonus Bonds. A few reasons, like avoiding tax etc plus while not guaranteed the risk of the Trust collapsing is extremely small in comparison with general savings funds.

[pete376403]

Im in KS, mainly because I need the compulsion to save. The $10K that has built up in the first year or so is far more than I have ever managed to save, at any time. That it gets taken out of pay before I see it, allied with not being able to easily get at it, means there is a chance it will be worth something come retirement.

[Oakie]

Oh here then, have some real figures to chew over:

I joined KiwiSaver on 16 April 2009

By 31 March 2010:
I had put in $913.82
My closing balance was $2089.09.

The closing figure included fees and interest but excluding the one off $1000 start up sweetener. (so closing bal was really $3089.09)

By my maths this is a return of 129%

To date I've put in $1370 of my own money and my balance is at just under $5000. You just can't convince me that KiwiSaver is a bad thing. Sure, there's a chance that something bad could happen to the provider I've chosen but there is a deal of protection there so I'm quite comfortable.

[Okey Dokey]

I don't like the idea of government compulsion, myself. It seems they grab enough of our income through all the bloody taxes and rates without taking control of more of my money. If I want to save I will do it myself on my own terms. I'd rather have the freedom to access my money when I wish, and not have to wait until I am 65, or whatever age they decide I can have it.

To me, having this freedom is worth turning down their $1000 startup and ongoing contributions.

My 2 cents.

[oldrider]

I recommend Gareth Morgan investments. He is my providor and also a motorcyclist.

Gareth Morgan is a motorcyclist by "default"...it is his wife "Jo" that is the "real motorcyclist" and the inspirational driver behind their motorcycle adventures!

Funny how she is portrayed as the follower, just because she is a woman, sexist bastards!