PKF Francis Aickin Limited, Far North, New Zealand
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22 Jun 2017
Did you sign up for KiwiSaver? Do you know which Fund your money is going in to or how much of your savings are being paid to your provider in fees? Do you have any idea how much you will have saved in KiwiSaver in say 5 years, 10 years, or when you retire?If you can’t answer these questions then you can rest a little easier from July, as Government has announced key changes to KiwiSaver reporting.Every KiwiSaver investor already should receive an annual statement with information about their savings. In addition to the current requirements KiwiSaver providers will now give the following additional information:• total fees paid in the year (in dollar values);• the total amount that the investor’s account grew by over the year; and• summary transaction figures detailing the money that has gone in and out of the investor’s account during the year.Government has also decided that retirement savings and income projections should be included in KiwiSaver annual statements.The purpose of including projected figures on annual statements is to help New Zealanders “project forward” and understand how their current KiwiSaver contributions and investment decisions can impact on their retirement savings over time. So, if you are interested to see how your current savings will have accumulated at retirement, and can’t wait for your annual statement, another way of doing so is to try out any of the KiwiSaver Retirement Calculators available on the internet. If, like me, you are creeping closer to retirement you may get a fright when you compare what you would like to have saved to what your KiwiSaver contributions are actually going to be! If this is the case, and your budget allows, it may be time to increase your contributions!Now may be a good time to look at your provider too, and consider if you are with KiwiSaver Fund that works best for you.If you didn’t choose a provider when you signed up for KiwiSaver then Inland Revenue would have allocated one of the default schemes for you. The providers are AMP, ANZ, ASB, Mercer, Fisher Funds, Grosvenor, KiwiBank, BNZ and Westpac. Each provider invests in 5 types of Funds: Defensive, Conservative, Balanced, Growth and Aggressive. These funds generally invest a percentage of money in growth assets (shares and property) which usually bring higher returns long term, than income assets (cash and bonds). For example, a Defensive Fund may hold up to 9.9% in growth assets compared to an Aggressive Fund which at the other end of the scale could hold 90% to 100% of your investment in growth assets. You are able to choose what percentage of your contribution goes into each Fund and you can, at any time, switch provider, or stay with the same provider but change the percentage combination within the Funds. For example, you may choose to invest 50% of your contributions in a Conservative Fund and 50% in a Growth Fund. You need to consider your level of comfort with investment risk and how long it will be before you need to draw on your KiwiSaver money when choosing your percentage combinations.
Everyone who belongs in the Baby boomers and Generation X will either already be retired, or needs to be planning for it. If you are not already in KiwiSaver you seriously should be considering it, after all, what other investment gives you an immediate 50 cents for each dollar you contribute (up to the value of $1046)
The KiwiSaver year end runs to 30th June, so there is still time to make a lump sum payment if you haven’t already taken advantage of the $523 available from the Government.
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