Things to Consider with KiwiSaver
Please note this article has been updated for the March 2024 financial reports for KiwiSaver.
KiwiSaver is a voluntary retirement savings scheme to help you save for your retirement. It started in 2007 and as at 31 March 2024 there were:
3,334,654 members
$111.8 billion funds under management - up 19.3% on last year
$33,514 average member balance
Source https://www.fma.govt.nz/assets/Reports/KiwiSaver-Annual-Report-2024.pdf
KiwiSaver is open to all New Zealanders and employees can contribute at a rate of 3%, 4%, 6%, 8% or 10% of their gross salary or wages. If an employee opts into KiwiSaver, then the employer must contribute at least 3% of the employees gross salary or wage. The self-employed and unemployed can choose how much they want to contribute. KiwiSaver members can access their contributions once they reach the age of entitlement (currently 65) or under four other defined circumstances. There are many KiwiSaver providers from which you can choose to invest your KiwiSaver funds with.
Thing to Consider
KiwiSaver should be considered as a long term savings scheme to help fund your retirement. As a result, short-term drops in the market will not have as much impact on your overall investment. A common saying for this “Time in The Market Beats Timing The Market”.
The amount you contribute should be based on your cash flow. This may change over time and you should review this annually.
The KiwiSaver provider you choose must fit your risk profile. This will vary from person to person. Make sure you choose the right fund for you.
Review your KiwiSaver providers annual reports particulalry in relation to returns made and the fees charged. The returns and fees vary across all providers. You must not just give a provider your money and then ignore it - track your results!!!!
You MUST know where your funds are invested, including:
The KiwiSaver Plan you are invested in (defensive, conservative, balanced, growth or aggressive). This should match you risk profile.
The investment strategy for your KiwiSaver Plan - estimated return, risk and investment exposure.
How much of your funds are invested in cash, fixed interest, equities and property.
Names of assets that your KiwiSaver Plan invests in.
Make sure you contribute enough to earn to be eligible for the government contributions. Currently if you contribute $1,042.86 per year the government will contribute $521.43.
KiwiSaver should be only part of your retirement savings plan - there should be other things that you are planning for and investing in.
How is your KiwiSaver doing?
James
Image source https://en.wikipedia.org/wiki/KiwiSaver