kiwisaver worth a punt?

[lovegear]

There I was sipping my morning cup of tea, browsing the Dom, when I read a headline that had me spilling the stuff all over it:

Every Kiwi should take the $1000, says expert

http://www.stuff.co.nz/stuff/dominionpost/0,2106,3663854a6034,00.html

$1,000 sound like a gift horse, but said expert fails to take into account the magic of compound interest! To illustrate, below is a table that shows the ammount you would get after 10, 20, 30 and 40 years assuming a DIY savings scheme earns just 1.5% more p.a. than kiwsaver. Also assumed is you contribute to the scheme the minimum ammount (4% of gross income) for just one year and take 'contribution holidays' thereafter. Figures in bold are where DIY wins out...


Income 30000 60000 90000 120000 150000
contribution 2200 3400 4600 5800 7000
(4% of gross income, including the 1,000)

Retirement payout in kiwisaver, assumed return 8.5% p.a.
10 years 4974 7687 10401 13114 15827
20 years 11247 17381 23515 29650 35784
30 years 22138 34213 46288 58363 70439
40 years 47794 73863 99933 126002 152072


Retirement payout in DIY scheme, assumed return 10% p.a.
10 years 3112 6225 9337 12450 15562
20 years 8073 16146 24219 32292 40365
30 years 20939 41879 62818 83757 104696
40 years 54311 108622 162933 217244 271556

[minimoke]

The Government is very keen to see that any KiwiSaver product does not fall over. They don’t want to see Mums and Dads burnt from their investment as it is the Govts attempt to encourage people into a savings routine. What this means is that the KiwiSaver products have to be low risk, which in turn means the yields have to be low.

Lovegear I think your model is interesting except the 8.5% return is too generous. Try it at current bank deposit rates.

As an aside another interesting lesson from the Government is if you do nothing you get something. Eg if you don’t save we’ll give you $1000.

[CJ]

Yes but you can take it out afer X years to buy your first house.

Not worth returning to NZ for though. think I will stay in London a bit longer (Australian tax rate reduction looking interesting as well).

[minimoke]

quote:Originally posted by CJ

Yes but you can take it out afer X years to buy your first house.

You won't be able to withdraw your $1,000. That gets locked in until retirement.

[lovegear]

Minimoke, I might go for it still if I can get an exposure to exotica not in my current portfolio (such as an Eastern European emerging market growth fund), but I don't suppose such things will be on offer if they are going for mediocre "balanced" funds [xx(]

[thereslifeafter87]

Kiwisaver is utter cr*p.

It's the only reason we're facing this capital gains tax!

The Australian scheme is 10x more effective and simpler.

Savings are forced. Employers have to contribute 9% of an employees salary to a scheme. This is what is driving the Australian funds management industry.

We need a compulsory super in NZ.

[shasta]

I agree TLA87 we need compulsory super.

Have recently joined my work scheme & i'm paying 5% of my salary, which gets matched by the company.

Being 30 this year, leaves me plenty of time to accumulate a decent retirement fund, & i get to choose the fund its invested in myself.

The Aussie scheme is generous, although i read that FBU has endorsed the Kiwisaver scheme & will top up its workers contributions by another 2%.

I hope the Govt looks at tax breaks/incentives for employers to assist there staff with super contributions.

[minimoke]

Look forward to Stage Two – which will be the introduction of compulsory employer contributions. Stage One KiwiSaver will put in place all the infrastructure that is necessary – a simple piece of legislative change is all that will follow. Stage Three will be compulsory employee contributions.

[Mr_Market]

Unfortunately wages will go down to compensate. The loser will still be the employee, who now a) gets some of his take-home pay taken away and b) is restricted as to where his money can be invested.

[rmbbrave]

ING gives biggest saving of KiwiSaver providers
ING will be the cheapest of the KiwiSaver default providers and AXA will be the most expensive.

Papers submitted to the government actuary by the six default providers - the firms who will provide KiwiSaver accounts and funds for savers who do not pick a fund provider themselves, or have one picked for them by their boss - show monthly fees on accounts range from $2.75 at ING and Tower to $3.06 at AXA.

Annual investment management and trustee fees will range from 0.534 per cent at AXA, the most expensive fund manager, to just 0.25 per cent at ASB Group Investments, though while all the other managers are active managers, ASB is a passive manager, providing passive funds which track markets and are much cheaper to provide.

As well as the above, there will be other costs which KiwiSavers will not see, such as the costs of buying and selling shares.

The KiwiSaver fees compare well with other super savings schemes, even that offered by the government to its own workers, the State Sector Retirement Savings Scheme.

For example, ASB Group Investments charges government workers $2.50 a month account fees, and between 0.35 per cent a year for its cash fund and 0.49 per cent for its conservative, growth and balanced funds.

But the KiwiSaver default fund pricing looks sharpest when compared with regular personal super savings schemes and smaller existing workplace schemes.

For example, Sovereign's Asset Architect personal retirement plan levies a fee of up to 25c in each $1 contributed in the first year, dropping to a maximum of 5c in the second year, and fund fees (including trustee's fees) run between 1% and 1.5 per cent a year.

AMP's current workplace super scheme charges fees of up to 2.5c in every dollar saved, has a $6 monthly account fee, trustee fees of between 0.05 per cent and 1 per cent (depending on how much money has been saved by a firm's workers), and fund management fees from 0.375 per cent for the safest funds up to 0.7 per cent for growth funds.

The fees levied by the six KiwiSaver default providers cannot be raised for three years.

Other fund providers which offer KiwiSaver schemes - the likes of banks, insurance companies such as Fidelity Life and fund managers such as Fisher Funds - will be able to charge higher fees, though the government actuary must judge them reasonable.

http://www.stuff.co.nz/4034765a13.html

[rmbbrave]

Morgan plans a KiwiSaver clean up

Gareth Morgan, the bete noir of fund managers, is plotting a KiwiSaver ambush on the savings institutions he accuses of systematically acting against the interests of their savers.

"My agenda is to galvanise a cleansing of the practices they've pursued in the past," says Morgan, who registered Gareth Morgan KiwiSaver back in January 2005 - so early that he was able to reserve rights on the www.kiwisaver.com website.

His particular gripe is hidden fees and expenses that fund managers reserve the right to take. He says his KiwiSaver scheme is built on four key guiding principles, all designed to distinguish it from the kinds of "naughty behaviour" he accuses others of.

Morgan says his KiwiSaver will:


Have a single fee that covers all expenses incurred by the manager. There will be no "other fees" or "expenses".

Not have any capacity to create "reserves", which he says can later be acquired legally by the fund managers sneakily moving them onto the balance sheet.

Not have pooling and unitisation - this is essential if savers are to be able to see what they own and to independently verify the accuracy and honesty of those into whose care they have entrusted their savings.

Be properly diversified: "We won't parade a narrowly focused portfolio of NZ shares as somehow being appropriate as a long term savings vehicle."
But the rueful campaigner added: "I do wish the minister of finance had cleaned up this industry before putting in place a regime that is going to herd the unsuspecting into a raft of long term products that are not in their interest."

Morgan, father of TradeMe founder Sam Morgan, describes the past two decades of long-term savings in New Zealand as a tragedy.

"Both in New Zealand and internationally, it's been dominated by life insurance companies. The unfortunate consequence has been that many of the techniques of obfuscation and confusion this industry has used to befuddle life insurance policyholders have been migrated across to the management of people's savings.

"The net result is that savers have received lousy returns on their money (typically under 40 per cent of the returns actually made on those funds) and have ended up pretty disillusioned with the products and the ethics of those who have promoted them. In my view this has contributed in no small way to the flight from financial markets to residential property as a safe investment."

Morgan claims the most common techniques that have been employed to achieve the goals of the companies at the expense of the objectives of the savers have included:


Reserving: With long term superannuation-type products the "fund" has a life of its own. It is common for those running the fund to reserve monies for expected (and unexpected) events - such as tax changes, expenses changes, even to simply smooth returns between years. As soon as monies are reserved in this way, their ownership becomes confused and the line between any particular saver and the reserves gets blurred. Should savers switch their savings to other funds, they do not take a share of those reserves. There are then legal means for fund managers to acquire those reserved funds and feed their own bottom lines.

Unitisation: Funds typically block transparency for members by the use of units and unit prices to describe their value, says Morgan. The authorities in Australia have taken most of the big life insurers to task for mispricing units, he says, "and curiously in every case the mis-pricing has been in favour of the company". That adds up to a pattern of misbehaviour across the industry.

Hidden fees: Typically the fund will "headline" as low a fee as it can, but the effective total fee plus expenses will be far higher. Much happens behind the mask of unit pricing and is invisible. "It's not uncommon for products with headline fees of 0.5% to have an effective cost of 3%," says Morgan.

Diminishing the legal status of the client: Morgan says in setting up his KiwiSaver, lawyers offered trust deeds decl

[rmbbrave]

Who should invest in KiwiSaver?
Sunday Star Times | Monday, 23 April 2007

Everyone, says Money editor Rob Stock.

When KiwiSaver arrives on July 1, there'll be a big choice for people to make: whether or not to open an account.

For many it won't be a question with immediate priority.

Only those who shift jobs after this date to a firm large enough to be obliged by law to offer KiwiSaver will be forced to either have an account opened for them, or opt out.

Everyone else, including non-moving employees, the self-employed and even the nation's non-workers or part time workers under the age of 65 can make their choice at their leisure.

They'll be able to take out accounts at their banks, through insurance companies, or through their workplace, as Kiwisaver accounts will be as easy to open as bank accounts.

But who should open a KiwiSaver account? Everyone: There's a $1000 sweetener for every new account opened. Okay, savers don't get the money until age 65, but by then compound interest would have been at work. Assuming 2.5% real return (after fees - which are subsidised - and tax), that $1000 would have grown into $1131 after five years. After 30 years it would be worth around $2100. After 65 years, for an account opened for a baby, it'd be worth around $5000 in today's terms. Of course, once you open an account you are obliged to save either 4% or 8% of your gross pay into it, though those who do not want to do so could simply apply for a 12 month contributions holiday, and then when that ends apply for another and so on. The reality is, the $1000 might not survive a change of government, so take it while it's on offer.

People aged 60 to 65: For these people, opening a KiwiSaver account is a no-brainer. They're near to retirement, and so should be saving like billy-o anyway, so not claiming the free $1000, which they'll get their hands on in five years or less, would be criminal. If that means diverting some of their current regular savings into KiwiSaver, so be it. With the government fee-subsidies, it's a good value way to save.

Children: Yes, they too can have a KiwiSaver account, and damn well should, though parents will have signing rights. Why not get them that $1000 while it's there to be had. Those who do not earn (pocket money is not counted), won't have to save a thing as 4% or 8% of nothing is nothing. They'll need an IRD number, but parents can get them one of those within weeks of their being born. To really annoy your children, ask their grandparents to make Christmas and birthday contributions as gifts. Parents can also divert some of their kids' pocket money into KiwiSaver as well, another measure likely to irritate them, but teach them a valuable lesson. Much of what is written in the next category also applies to them.

Young-uns starting out at work, but aiming to buy a home later: Who wants to think about saving for retirement when they enter the workforce at 15, 18, or 21? Perhaps that's understandable, though many will be wondering how they can get some help taking their first step on the housing ladder. After three years, Kiwisavers who don't own a home will be able to withdraw their contributions to help with a deposit. Not only that, but the government will give them $1000 for each year they have saved money in the scheme, up to a maxi mum of $5000. Couples can double up, so that's $10,000 of free money (the $1000 sweetener they'd each get has to remain in place). Parents, don't let your kids mess this up. Open them an account at least five years before they could decide to join the workforce, so their inaction won't shut them out of this opportunity when they most need it.

People whose bosses will chip in free money: When was the last time you turned down an offer of free money? I suspect the answer is: "Never did, never would". But if your boss said he'd put $1 into a KiwiSaver account for every $1 you saved, would you? How people answer that question will determine whether KiwiSaver is a success or flop. AMP say about a third of businesses are considering

[rmbbrave]

When I move back to NZ next year...

I will be opening an account for my 2 year old. (She doesn't have to pay anymore after that)

Ka-ching! - $1000.

By the time she starts working she will have had the account for more than 5 years and would be able to get $5000 to buy her first house (assuming things don't change.)

For my <s>lazy</s> wife who doesn't want to work.

Ka-ching! - $1000. (She doesn't have to pay in any more money either.)

For myself. Ka-ching! - $1000.

I will have to pay 4% or 8% of my gross salary every year. Half of this will be tax free. I think I'll go for 8%.

Half of the money you put into Kiwisaver is tax free ("employer contribution"). All of the money you put into a DIY scheme is after tax dollars

Assume gross salary $50,000 = Net Salary of $38,590.

http://www.ird.govt.nz/how-to/taxrates-codes/itaxsalaryandwage-incometaxrates.html

@ 8% You can put $4000 per year into Kiwisaver. If your employer reduces your salary to $48,000 + $2000 in "employer contribution" to your kiwisaver then you pay tax only on $48,000. Net salary is $37,290+$2000 = $39,290.

By joining Kiwisaver you are getting $700 more money a year . Did Lovegear include this in his above calculation?

Effectively Kiwisavers on a $50,000 gross salary get $4000 in their account per year but DIYers get only $3300 to invest any way they want. Kiwisaver have to pay $40 or so a year in fees but this still leaves them $660 (or 20%} more a year than DIYers.

Most people on sharetrader claim to be better than Fund managers but surely even the most widely optimistic are 20% better every year.

I was loathe to give my money to WayneKerrs like ING, AMP, AMP & ASB etc to manage, but someone like Gareth Morgan - now that's a different story altogether.

Other possible benefits.

In the unlikely event that we don't buy a house in our first five years after living in NZ we get $10,000 (5k each) from the Govt to do so.

[minimoke]

RMB a few slight problems with your cunning plan.

You (or some other mug) will have to cough up an extra $1,000 in tax to pay for your 2 year olds contribution – same with your wife. Your own personal tax will just be a money go round – pay an extra grand in tax; get it back as Kiwisaver.

Sure in a few years you’ll potentially be able to able to get your deposit subsidy. Except of course this money doesn’t grow on trees – you’ll have to front up with $10,000 in extra taxes somewhere along the way.

Of course you’ll be saving with a KiwiSaver scheme who will take advantage of the government fee subsidies – but yet again money in = tax out.

But here’s the killer. When you buy your house you might firstly want to take out half your savings to go as the deposit. Your KiwiSaver scheme is going to have conniptions when it looses half its fund. What will they do – but put up their fees. Your net return on your Scheme is going to be worse so what will you do. To get a better return on your cash you’ll put half your Kiwisaver contributions in to the mortgage repayments. Brilliant – except your kiwisaver provider has now also lost half their revenue stream.

Oops. So what will they do – they can’t go into higher risk investments so they will have to put up their fees. Now you are probably in a negative return situation with your Kiwsaver provider so what do you – go on a contribution holiday of course. Except your KiwSaver provider is now totally knackered and they will end up going to government for assistance which can only mean your taxes will go up.

[rmbbrave]

I think Cullen is trying to give NZ kiwisaver instead of tax breaks.

He is trying to give almost everyone under 65 $1000. It could add up to $3,000,000,000 over 30 years or so and that is not including future NZers.

[minimoke]

Add to this another $3,000,000,000 in home deposit assistance. And this coming from a government that wants to cool the housing market! And does anyone else see the other irony with a Labour government who provides even more tax benefits to the rich through the Kiwisaver Salary Sacrifice and PIE provisions.

[CJ]

Starting to look better. Might use as the conservative portion of my investments (currently have a few index funds).

Minimoke - Sure all this giving by cullen has to be paid by taxes so I may aswell take part in the hand out (better to give with one and receive with the other rather than give with both).

Will withdrawl all (that I can) in 3 years to buy "first house" and start again (to keep my conservative investments a low %). Again, if there are going to be any distortions, I may as well be the one creating them rather than being negatively effected by it.

The Kiwisaver chagnes are now law so we need to figure out how to take advantage of them.

[CJ]

quote:Originally posted by rmbbrave

When I move back to NZ next year...

I will be opening an account for my 2 year old. (She doesn't have to pay anymore after that)

Ka-ching! - $1000.

By the time she starts working she will have had the account for more than 5 years and would be able to get $5000 to buy her first house (assuming things don't change.)
Why not put in $1000 per year (no need for gift thing to IRD or wont count towards the $27k) and the government will match the contribution? Does that work?

[skinny]

quote:Originally posted by CJ


quote:Originally posted by rmbbrave

When I move back to NZ next year...

I will be opening an account for my 2 year old. (She doesn't have to pay anymore after that)

Ka-ching! - $1000.

By the time she starts working she will have had the account for more than 5 years and would be able to get $5000 to buy her first house (assuming things don't change.)
Why not put in $1000 per year (no need for gift thing to IRD or wont count towards the $27k) and the government will match the contribution? Does that work?


As said on the Govt. budget thread, I checked it out and it appears that the government will match up to $20 per week to kiwisaver accounts for non wage/salary earners under 65. I certainly intend to take this option for my kids while it lasts, but I suspect it will not last long (There are around 1.5m kids in NZ...so the ongoing fiscal costs get pretty big if sufficent numbers of parents are rational and take the option.) AMAZED the media has not picked this up yet!!

I hold a few index funds so also see kiwsaver as a substitute for them. Apparently ASB will offer passive index funds so will look at that first when the details are released in July.

[CJ]

How does the credit to companies work.

If you have two jobs, and both employers pay into your scheme, do they both get a credit from the government. What if you have a few companies yourself (say set up for investment properties).

[CJ]

quote:Originally posted by skinny


quote:Originally posted by CJ


quote:Originally posted by rmbbrave

When I move back to NZ next year...

I will be opening an account for my 2 year old. (She doesn't have to pay anymore after that)

Ka-ching! - $1000.

By the time she starts working she will have had the account for more than 5 years and would be able to get $5000 to buy her first house (assuming things don't change.)
Why not put in $1000 per year (no need for gift thing to IRD or wont count towards the $27k) and the government will match the contribution? Does that work?


As said on the Govt. budget thread, I checked it out and it appears that the government will match up to $20 per week to kiwisaver accounts for non wage/salary earners under 65.

Government will matchup to $20 per week to kiwisaver accounts for those between 18 and 65. So my cunning plan doesn't work for the kids but will for the unemployed wife, or kids a uni.

[axion]

I haven't looked through this whole thing thoroughly , but it looks like a good choice for me to contribute $20 a week and get matched, and get the $1000, and then get the $5000 for a house after 5 years (?). And then just withdraw all the money and put it towards a house.

Disc: 18, student.

[edit - or not, seems you must contribute the whole 4% of income thing to get the housing subsisidy.]

[CJ]

Even if you dont get the subsidy, you can still pull your money out to buy a house. with the government contribution, over a short period of time, that is a 100% return on money.

[Ricardo]

Anyone done any number crunching on the merits for the self employed?

Is it worth forming a company, and matching your workers (own) contribution? There is a degree of self interest here, as I'm thinking seriously it could be worth a go, assuming you go for a scheme that wont rip you off.
I'm a dedicated follower of Gareth Morgan, as I reached the same conclusions on investment/insurance funds independently back in my youth. When I saw the insurance policies mature that my parents and contempories signed up for when they started work I saw the light. When they took the policies out they were thinking a new car and world trip at retirement, what did they get, a new washing machine.
A govt subsidy may not be enough if your fund doesn't give a reasonable yield after all the fees, allocations into "reserves" etc.

But, assuming you go for a decent fund, is it worth while for a 50 plus self employed (but not yet high income) share trader?

[Serpie]

I went to a Kiwisaver pitch by one of the scheme providers yesterday.

It seems obvious that the march towards compulsion will be a fairly quick one (less than 5 years IMO).
For those who do not have the skills or desire to be active investors it's ideal. Low risk, low maintenance.
For those of us who are used to making our own decisions it's no where near aggressive enough.

The big winners are the scheme providers, who suddenly got the whole workforce thrown in their lap as customers. The revenue stream for the providers will be unreal.

[CJ]

We already have compulsion. Starts at 1% up to 4% made by the employer.The only change I see is that if you opt out, they will still make it compulsory for the employer to make payments.

Employers ahve already raised the issue with this. If they have two identical employees and both should be on $100k. If one opts in and the other opts out, they will be on a different total package. You give the one on less, more cash in hand so that it is equal and then they opt in and you have to give them a salary cut? Not practical


quote:Originally posted by Serpie
It seems obvious that the march towards compulsion will be a fairly quick one (less than 5 years IMO).

[minimoke]

Do you join Kiwi saver or not?

Person A earns $50,000 gross and wants to buy a house in 5 years time and can afford to put $10,000 into kiwisaver/mortgage payments .
Person B earns $50,000 gross and also want to buy a house in 5 years time and can afford to put $10,000 into mortgage payments

Person A joins KiwiSaver so after 5 years the tax payer will give over $5,215 in tax credits – which can’t be used for the house. There is also $200 worth of Fund Fees that will be paid into the account over 5 years. Of Person A’s $10,000, $2,000 will have been paid to KiwiSaver and $8,000 into personal savings.

After 5 years Person A has $40,000 in personal saving and $10,000 in KiwiSaver that can be withdrawn for the house deposit. The tax payer will stump up another $5,000 for the house deposit so there is a total $55,000 deposit. Half the KiwiSaver deposits can go into paying the mortgage - $1,000 a year will still go into KiwiSaver leaving $9,000 for the mortgage repayments – meaning you can borrow $85,463 (at 10.00% for 30 years at Kiwibank). Total buying power is $140,463.

Person B puts all the $10,000 into personal saving so after 5 years has a $50,000 deposit. The whole $10,000 can go into the mortgage payments meaning a mortgage of $104,379. (includes an extra $1,000 a year negotiated pay rise from the employer to match KiwiSaver contributions) Total buying power is $154,379.

So Person A has to buy a cheaper house (but has the benefit of some funds in a Superannuation account) than Person B

After the extra 30 years Person A will have $733,000 in total assets. ($1,000 initial tax payer start up, $5,215 in first 5 year tax credits, $30,000 in an extra 30 years of tax credits, $30,000 in personal deposits into Kiwisaver plus $30,000 in employer contributions – all growing at 5% a year) plus $607,072 in house value ($140,463 at 5% compounded growth over 30 years)

After 30 years Person B will have $667,217 in total assets ($154,379 compounding at 5% ).

Alternatively Person B could end up $903,768 - by buying the $140,463 house and dropping the mortgage back by $13,916. This means his loan would have been paid off in 17.39 years leaving 12.6 years to save $11,000 compounding at 5%.

On the face of it Person B will be better off if he buys the same house as Person A but less well off if he goes for the dearer house.

Kiwisaver isn’t really stacking up under this scenario.

But what would happen if the Govt just gave the person the money directly? – see my next post.

[minimoke]

See my previous post.
Is the govt misguided with the use of tax payer funds to help people with their home buying aspirations?

Lets say the govt left the person to their own devices but gave them the tax payer cash for house buying instead of going to KiwiSaver

After the first 5 years the person would have a $66,095 deposit ($50,000 saved plus $1,000 start up + $5,000 deposit assistance + $5,215 in tax credits + $200 in account fee help + $4,680 ($1,040 employer payment refund x 4.5 years)).

The person has $12,283 for mortgage repayments ($10,000 of their own money plus the govt is prepared to stump up $1,043 a year in tax refunds + $200 in account fees + $1,040 employer refunds) meaning a mortgage of $116,571.

So this person could buy a house worth $182,666 and have it paid off in 30 years.

In 30 years total assets would be worth $789,471 – better off than Person A.

Alternatively this person could end up $1,056,111 - by buying the $140,463 house (growing at 5% PA = $607,602) and dropping the mortgage back to $74,368. The loan would be paid off in 9.35 years leaving 20.65 years to grow the $12,283 annual repayments = $448,509.

Again KiwiSaver doesn’t stack up as a means of creating wealth for the individual.

[Halebop]

Alternatively "kiwi-saving" becomes a cultural norm, the NZX now hosts an additional 140 publicly listed companies, including 7 or 8 reasonable sized New Zealand based multinationals (plus a few more existing business like Fonterra who saw the benefits of deeper financial markets). Most of these companies make strategic decisions in NZ, including supporting international infrastructure like IT from a local base. Capitalisation rates have decreased, increasing the value of companies and helping support innovation and expansion. Employment of higher values jobs in IT, law, finance, operations & strategic management, R&D, consulting etc expands, while salaries rise on the back of higher productivity. Small businesses benefit from the larger pool of medium to larger enterprises. The trade balance is strongly positive despite the $NZ trading at parity with $US. Thanks to increased ownership of local business and foreign trading subsidiaries, balance of payments are neutral. New Zealand inc are now world leaders in 2 or 3 industries that didn't even previously exist. Employers still face issues with tight labour markets but thanks to increased corporate activity and higher gross wages, tax rates are reduced to less than 30% of GDP despite a doubling of the health spend per capita. Everyone, from home owners to Non-Kiwisavers are richer as a consequence of the expanded savings pool, but few don't "kiwi-save" and the benefits of leveraged housing over un-leveraged saving have evaporated thanks to strong financial markets and reduced tax rates.

[cantab]

Pigs might fly too, anyone remember Flying Pig? :D

[CJ]

Minimoke,

I was getting baffled by all your numbers. Correct me if I am wrong but:

- person A is better of after 5 years.
- person A becomes worse of as they cant afford as nice a house due to lower mortgage repayments (as money is diverted into kiwisaver).

Wouldn't Person A just pull out of kiwisaver at that point? (cant this be done?)

Also are you sure Person B will be able to negotiate a $1000 salary increase? the employer contributions to person A are effectively paid by the government via tax credits which wont be avaliable to the employer for person B. Also, they wont give a $1000 increase incase they then opt in (you cant decrease their salary just because they opt in).

[minimoke]

CJ
You are supposed to be baffled by the numbers – do you think the Government really wants to set up a scheme that is so easy to understand that people will see it for what it really is.

Back to Person A - His buying power for a start is less. He might have this theoretical extra $1,000 start up cash but this can’t be used until retirement – 30 years into the future. He’s also been suckered into thinking he’s going to get all this housing assistance – but there is a risk he won’t!

Person A may not be really much worse off because they can’t buy the nice house. The socialist government has determined that KiwiSaver can’t be used to buy the nice house. The buyer has to buy the lower quartile house. Additionally Person A shouldn’t be striving to improve themselves because if they start earning over $50,000 they run the risk of loosing all these housing benefits (The household income can’t exceed $100,000 for two people).

Person A can pull out of KiwiSaver but can only withdraw their savings - not the tax breaks, up front $1,000 or any of the other benefits. Person A could perhaps go on a Contributions Holiday – but each month/year their KiwiSaver fund will be deducting account fees so this may see the residual investment diminish.

[minimoke]

quote:Originally posted by Halebop

Alternatively "kiwi-saving" becomes a cultural norm,

Halebop
Those that can afford to save are already doing so. They already have their property, savings, super schemes and share investments.

Then there are those that can’t afford to save - and if you can’t afford to save you aren’t going to be able to afford KiwiSaver.

Average NZ pay rates are $22 gross an hour and 65% percent of earners had hourly pay less than the average.

Your utopia isn’t going to happen for as long as the majority of the working population take home subsistence pay.

[Tok3n]

If would be nice if you were allowed to invest the money in your kiwi saver on your own (but not on property) for those that don't like handing money over to fund managers.

[Deev8]

quote:Originally posted by Tok3n

If would be nice if you were allowed to invest the money in your kiwi saver on your own (but not on property) for those that don't like handing money over to fund managers.Something like the UK's SIPPs - self-invested pension plans.

[Halebop]

quote:Originally posted by minimoke

Halebop

Those that can afford to save are already doing so. They already have their property, savings, super schemes and share investments.

Then there are those that can’t afford to save - and if you can’t afford to save you aren’t going to be able to afford KiwiSaver.

Average NZ pay rates are $22 gross an hour and 65% percent of earners had hourly pay less than the average.

Your utopia isn’t going to happen for as long as the majority of the working population take home subsistence pay.

I was a student in the 80's and haven't saved any personal income since the 90's. Today I still spend less than I earn from week to week but then tend to blow it all in a lumpier pattern all the same. Although by the end of the 90's my wage/working income was above average, my pay for the whole decade was well below average. I saved (Generally 30 to 40% of a modest income) and invested because of an understanding of the long term benefits, not because it was easier. Now I don't need to save thanks to earlier sacrifices.

I would phase in a few further steps, allowing personal super schemes and additional investment options, tax deferment until withdrawal and particularly make it compulsory.

If working people are saving an average 4% gross per year and employers are "forced" to cough up the same, once the initial "shock" and "hump" is climbed, it is forgotten. But if about $8bn pa is being saved, with real contributions probably rising by the rate of productivity growth & population growth (2.5%+ pa) and returns compounding at a real +5%, then within 10 years there would be a capital pool of $111b in today's dollars, rising to almost $324b in 20 years. It's improbable that such a pool wouldn't positively impact:

The number of local listed (and unlisted) companies
The volume of available risk capital
The size of local companies
The proportion of local ownership
Commercial Innovation & Productivity
New industries
Rising real wages and improved vocational opportunities
Receipts from foreign earnings

I think not utopia, just math.

Australian governments from both sides of the left / right divide have managed to introduce and augment such systems without ending the world. I don't think it is credible to suggest the same couldn't happen here. Sure we are poorer (there is a linkage to one series of whys I suspect) but unless we do something different with our capital to upgrading kitchens using foreign loans, we will continue to be poorer as well.

[minimoke]

Lets not forget the Cullen Fund already has $3,981m of tax payer funds sitting in it. We could also add to this the $6-7b of ACC investment funds already out there – How much more tax payer cash will it take to achieve the take off you are seeking?

And if your vision has merit (and I’m not necessarily suggesting it hasn’t) then why do the Fund Managers not invest every cent back into NZ. Probably because the NZ investments are already maxed out, relative to offshore opportunites, which might suggest that the returns aren’t there to be made by investing KiwiSaver back into NZ.

And why does Cullen not share your vision. With a stroke of his pen he could easily mandate that anyone wanting to set up a KiwiSaver Fund has to invest all contributions back into NZ Inc. But for reasons better known by others he hasn’t!

[mamos]

Yeah I am disappointed about this too.

I know in Australia you can. I saw an ad by Comsec today about self managed super funds.

A self managed fund best advances your own interests and also encourages greater investor education and following of the sharemarket.

Does anyone know whether there are restrictions in Australia on what you can invest your self managed super fund in?

Cheers

M


quote:Originally posted by Tok3n

If would be nice if you were allowed to invest the money in your kiwi saver on your own (but not on property) for those that don't like handing money over to fund managers.

[Halebop]

quote:Originally posted by minimoke

Lets not forget the Cullen Fund already has $3,981m of tax payer funds sitting in it. We could also add to this the $6-7b of ACC investment funds already out there – How much more tax payer cash will it take to achieve the take off you are seeking?

Just to make a distinction, 4%(+4%) savings are "investor" funds, not tax payer funds. The funds are in distinctly individual accounts, have no taxpayer (Government) guarantee and rely upon the expertise of the fund managers to perform. At 8% of Gross earnings, ACC and the "Cullen" fund would quickly be dwarfed by these super funds if take up is high or it is made compulsory.


quote:Originally posted by minimoke

And if your vision has merit (and I’m not necessarily suggesting it hasn’t) then why do the Fund Managers not invest every cent back into NZ. Probably because the NZ investments are already maxed out, relative to offshore opportunites, which might suggest that the returns aren’t there to be made by investing KiwiSaver back into NZ.

The New Zealand market lacks depth because there are not the same incentives or infrastructure for investing. Consider other "anglo" cultures... UK provides super saving tax shelters, Australia makes savings compulsory and add tax advantages, Pensions and saving are cultural in the USA thanks to a combination of low state retirement funding and tax advantages. Until Kiwi Saver New Zealand had... depreciation allowances on appreciating housing stock.

Add in depth and liquidity, the market can support more local businesses, after all we don't totally lack corporate activity - it is simply owned by Australians and others further afield. Younger medium to (growing) large businesses are almost invariably sold to foreign owners. Branch office businesses don't get to make the sort of strategic decisions that head offices get to consider. More head offices in New Zealand will benefit New Zealand.


quote:Originally posted by minimoke

And why does Cullen not share your vision. With a stroke of his pen he could easily mandate that anyone wanting to set up a KiwiSaver Fund has to invest all contributions back into NZ Inc. But for reasons better known by others he hasn’t!

I don't think anyone would rationally mandate restricting investing to New Zealand. There are rational advantages to geographic diversification and New Zealand corporates gain integration and scale advantages by purchasing or starting up foreign businesses that complement their existing activities. But with any amount of extra savings above what now exists, some will invariably find its way into local investment markets. As with anything subject to momentum, the more attention local financial markets receive, then the more attention local financial markets will receive.

[mamos]

I will answer my own question:

Investments
Other than a few very specific provisions in the Superannation Industry (Supervision) Act 1993 (largely related to investments in assets related to the employer) funds are not subject to any asset requirements or investment exposure floors. There are no minimum rate of return requirements, nor a government guarantee of benefits. There are some minor restrictions on borrowing and the use of derivatives and investments in the shares and property of employer sponsors of funds.

As a result, superannuation funds tend to invest in a wide variety of assets with a mix of duration and risk/return characteristics. The recent investment performance of superannuation funds compares favourably with alternative assets such as ten year bonds.



quote:Originally posted by mamos

Yeah I am disappointed about this too.

I know in Australia you can. I saw an ad by Comsec today about self managed super funds.

A self managed fund best advances your own interests and also encourages greater investor education and following of the sharemarket.

Does anyone know whether there are restrictions in Australia on what you can invest your self managed super fund in?

Cheers

M


quote:Originally posted by Tok3n

If would be nice if you were allowed to invest the money in your kiwi saver on your own (but not on property) for those that don't like handing money over to fund managers.

[CJ]

quote:Originally posted by minimoke

CJ
You are supposed to be baffled by the numbers good.


quote:Person A may not be really much worse off because they can’t buy the nice house. The socialist government has determined that KiwiSaver can’t be used to buy the nice house. The buyer has to buy the lower quartile house. they can still take out their contributions and buy any house, they just wont get the government hand out.


quote:Additionally Person A shouldn’t be striving to improve themselves because if they start earning over $50,000 they run the risk of loosing all these housing benefits (The household income can’t exceed $100,000 for two people).Again, the threashold is only for the government hand out. Say you put $1000 in a year for 5 years. Then you buy any house you want. You can take out your $5000 but because you earn too much or the house is two nice, you dont get the hand out. That is the same $5000 Person B has. However, Person A still has $6000 ($1000 initial plus government matching of the $1k pa). Not sure if employer contributions can be withdrawn but this goes into either the house money of the passive savings. Person A then goes on a contribution holiday. That seems to be better than Person B?? You have the same money for the house plus you have a retirement fund (small) where fees should hopefully be less than the annaul return.

[rmbbrave]

Michael Littlewood: Potential pitfalls of Kiwisaver

KiwiSaver appears too good to miss. Everyone who can afford to join should. KiwiSaver isn't just for employees. All under-65s should join, including children, beneficiaries, stay-at-home parents and even visiting Australians (they are entitled to work in New Zealand indefinitely).

All locals over 18 should contribute $20 a week, even if they aren't working, because that will be doubled by the tax credit. If they can't afford it, perhaps their spouse, parents or grandparents can.

So what could possibly be wrong with this rosy picture? Won't we all be better off in retirement and isn't that a good thing?

Like any major complex policy change, there are worrying unintended consequences.

One of these is policy instability. Even if a new government doesn't abolish it, KiwiSaver II will be changed. KiwiSaver I lasted 8 months. Perhaps KiwiSaver II will last less than 18 months. National isn't saying.

Policy instability also relates to unclear links between KiwiSaver and the problem it is supposed to solve. Is it a national or retirement saving problem? For retirement, the best data we have is that New Zealanders are generally saving enough.

Even if Kiwis weren't, Budget secrecy is no basis for such initiatives. It is simply unproven that the KiwiSaver changes will do anything but shift money from one pot into another. That's what overseas evidence suggests will happen.

The national saving problem is a different issue. Increasing saving to facilitate increased consumption in retirement will not reduce our overseas indebtedness, nor correct our propensity to spend more than we earn as nation.

There is a long list of further worries. First, borrowing to invest in KiwiSaver can now make sense. It's possible, in limited cases, to justify credit card loans to finance contributions. So, while KiwiSaver balances rise, we may also see rising household debt.

Anyone with a home can put the contributions on the mortgage. Suspending capital repayments to free up money is one way. After 12 months, they can also reduce mortgage payments further through the mortgage diversion scheme.

Students should think of using their interest-free loans to finance their contributions. And they will get most of it back soon enough to help pay for their first home.

The help for first home-buyers may have unintended consequences. Demand (and prices) for bottom quartile housing will go up and help intended for buyers will be partly captured by sellers. High valuations will be placed on chattels to slide the house price into the subsidised zone. Salary sacrifice arrangements may be used to lower pay (but not remuneration) to qualify for the Government's subsidy.

However, the biggest issue concerns New Zealand Superannuation's future. The Government says NZ Super will be unaffected. Really?

On reasonable assumptions, a KiwiSaver on the national average wage for 40 years will end up with about $320,000 in today's money. That's the annuity equivalent (for a male at 65) of about $22,000 a year after-tax for life (inflation-proofed). Of that, about 33 per cent has come from taxpayers. Using today's NZ Super, our KiwiSaver's total income will be $36,407 a year or 105 per cent of after-tax, pre-retirement pay.

Future governments could say taxpayers have helped pay for the KiwiSaver nest egg so why should the full NZ Super be paid?

Employers' contributions from April 1, 2008, are not more money. They will be part of employees' pay but locked up until age 65.

If employees' future incomes reflect KiwiSaver's compulsory, deferred pay, we will see a permanent reduction of 4 per cent in members' wages and that will affect the national average. NZ Super will rise less quickly (because the rate is based on the average wage) affecting all superannuitants, including the retired. Indirectly, they will help pay for KiwiSaver II by reducing NZ Super's future cost.

Tax incentives are distortionary, regressive, expensive and complex. But those are not

[Hommel]

The problem I have with Kiwisaver is locking up my money for at least another 21 years (until I'm 65) in a poor performing investment with high fees. I don't think the tax rebates are worth it.
I am in an employee super scheme at present and I'm certainly exploring my options but at present it's not clear to me what the best course is. Kiwisaver or not....

[Tok3n]

I have about 38 years of working life (till 65), so I think I'll join.

I've never used fund managers before (always been a DIY person), but yeah after researching, I see what you mean by "poor performing investment" lol.

[minimoke]

quote:Originally posted by Hommel

The problem I have with Kiwisaver is locking up my money for at least another 21 years (until I'm 65) in a poor performing investment with high fees. I don't think the tax rebates are worth it.
I am in an employee super scheme at present and I'm certainly exploring my options but at present it's not clear to me what the best course is. Kiwisaver or not....

Hommel
Your money is not locked in until you are 65 - it is locked in until the official retirement age (currently 65). By the time you reach 65 the retirement age will be 85!

And you probably have 18 months with a Labour govt to make up your mind because then you will be a KiwiSaver like it or not!

[CJ]

Has anyone actually seen an investment statement? the only one I have seen is Gareth Morgans.

You are meant to be investing starting 1 July aren't you??

[Halebop]

quote:Originally posted by CJ

You are meant to be investing starting 1 July aren't you??

New employees are automatically enrolled in Kiwisaver from 1 July but have a period where they can actively opt out (so essentially people will passively opt in - this more than anything else might determine Kiwisaver's success at attracting savers).

Existing employees can choose to opt in whenever they feel like and will not be automatically enrolled. I haven't read the fine print on this approach as to the consequences towards the "free" government contribution though.

[Cooper]

quote:Originally posted by minimoke

Hommel
Your money is not locked in until you are 65 - it is locked in until the official retirement age (currently 65). By the time you reach 65 the retirement age will be 85!

And you probably have 18 months with a Labour govt to make up your mind because then you will be a KiwiSaver like it or not!


Yeah, that's a genuine concern. Your savings are reliant on future regulation, which at the moment only looks likely to result in an increase in the working age.

My personal response is to have one kiwisaver scheme and one scheme which I can draw upon if I decide to retire early. I'm only going to put the minimum into Kiwisaver until these things become a little clearer.

[CJ]

quote:Originally posted by Halebop


quote:Originally posted by CJ

You are meant to be investing starting 1 July aren't you??

New employees are automatically enrolled in Kiwisaver from 1 July but have a period where they can actively opt out (so essentially people will passively opt in - this more than anything else might determine Kiwisaver's success at attracting savers).

Existing employees can choose to opt in whenever they feel like and will not be automatically enrolled. I haven't read the fine print on this approach as to the consequences towards the "free" government contribution though.
So what you are saying is that the funds have 8 days to get out an investment statement if they want employees to opt in? I think they are cutting it a bit fine.

[fundir]

My wife, who doesn't work in payed employment will be signing up and making voluntary contributions of $20pw which the government will match so she will be making a 100% return before the fund managers and fees kick in.

I already have my personal super which at worst I will suspend payments so that I can cash that in at 55 to fill the gap years. I will also probably sign up to kiwi saver as my employer is happy to let me do salary sacrifice to maximise the tax advantages. If combined with paying some back to the mortgage and suspending my existing super payments I could even end up with more cash in the hand each month, although I understand there is a 12 month delay on the mortgage payments and both the fund provider and mortgage provider have to agree to the mortgage payments component.

[minimoke]

quote:Originally posted by CJ
So what you are saying is that the funds have 8 days to get out an investment statement if they want employees to opt in? I think they are cutting it a bit fine.
[/quote]
CJ The loot heads off to IRD for three months after which it will then go out to the Provider. IRD will pay interest on the deposits in the meantime

[lakeside]

quote:Originally posted by CJ

Has anyone actually seen an investment statement? the only one I have seen is Gareth Morgans.

You are meant to be investing starting 1 July aren't you??


AMP have one I,ve seen. They have a fund above growth - extreme risk or something. fees about $40 per year.

[lakeside]

I don't like the way you have to pay in 4% of your wages so I could be paying in $120 a week to get $20 - not so hot but returns could be better with the tax changes PIE etc.

Also I don't like that the government tax break gets returned to the govt if you emigrate.

[Rif-Raf]

Anyone know of any comparisons being done between the various providers to see how their fees compare. (not just the default 6 either)

So who's good Gareth, Carmel, one of the big 6?

[lakeside]

There was an article in the last Sunday Star times.

Smartkiwisaver.co.nz is suposed to be good but costs $30.

www.workplacesuper.org.nz will have some comparisons.

Schemes so far are AMP, ANZ, AONSaver ASB AXA Credit Union First Choice Fisher Gareth M Grosvenor ING KS Supereasy Lifestages Mercer National Bank SIL Staples Rodway Superlife Tower Westpac.

Let us know when you have researched them!

My dad put his money in the 50's into "Scottish Widows" and the name just makes me laugh but they were the real deal regarding performance with the $$$s too.

[cantab]

Anyone who gives $70m away to charity is good enough for me.

[CJ]

Does anyone know when the tax credit to employers starts. Is it from 1 July or only from next year when they have to contirbute 1%?

[temuk]

[quote]Originally posted by Rif-Raf

Anyone know of any comparisons being done between the various providers to see how their fees compare. (not just the default 6 either)

So who's good Gareth, Carmel, one of the big 6?


Had a look at gareth morgan web site and he does some comparisons
and some are charging twice as much as others.

http://forms.gmk.co.nz/calculators/providerfees.aspx?sec=2

[Hommel]

It's tempting to go with Carmel if only because she is so damn HOT.

[minimoke]

Any financial advisor will tell you past performance is no guarantee of future performance. But Cullen is expecting NZ’ers to put their hard earned cash into KiwiSaver schemes which have no proven track record, no government guarantee and are being propped up to a huge extent by tax payer cash.

I am struggling to think of any industry in NZ which has had the ability to back the truck up and have the government shovel enormous amounts of cash into it. Imagine being in business and for every dollar you can extract from your client the government will give you another dollar. And there is talk that the truck will need to be bigger as Cullen is prepared to throw even more tax payer funds in the back next year. What makes the Financial Services sector so special?.

If the superannuation industry hasn’t had to work for this business why should it take its funds management seriously? What’s the bet that most of the Providers are entering into the spirit of KiwiSaver to not only reap the windfall of government largesse but also to get a new direct marketing list with no effort so they can on-sell their other financial services.

And is saving through superannuation the best vehicle for increasing individual wealth or preparing for retirement. What about the Govt offering to repay a dollar off a person’s mortgage for every dollar the property owner had to pay. A ludicrous suggestion but every one seems to be lapping up the KiwiSaver propaganda.

[lakeside]

quote:Originally posted by CJ

Does anyone know when the tax credit to employers starts. Is it from 1 July or only from next year when they have to contirbute 1%?


I think it is 2008 1% and then 1% more each year to 4%. Yes it will be more attractive to higher salaried people when the employer matches your 4% with another 4%. I think that is 4% tax free too.

Currently on the SSRP (state services) I pay say $100 a fortnight and the boss does the same ($100) but they pay $139 or whatever so they pay the tax too so I get the 3% tax paid. Its OK.

[lakeside]

quote:Originally posted by temuk

[quote]Originally posted by Rif-Raf

Anyone know of any comparisons being done between the various providers to see how their fees compare. (not just the default 6 either)

So who's good Gareth, Carmel, one of the big 6?


Had a look at gareth morgan web site and he does some comparisons
and some are charging twice as much as others.


http://forms.gmk.co.nz/calculators/providerfees.aspx?sec=2




GM comes in first and Westpac second although the differance lessens as the amount grows. 1% looks about the minimum charge according to the forensic accountants - I love it! I'm tempted to go with Gareth for the wifes one - what sort of fund is it - plenty of growth & overseas exposure?

[CJ]

quote:Originally posted by lakeside


quote:Originally posted by CJ

Does anyone know when the tax credit to employers starts. Is it from 1 July or only from next year when they have to contirbute 1%?


I think it is 2008 1% and then 1% more each year to 4%. Yes it will be more attractive to higher salaried people when the employer matches your 4% with another 4%. I think that is 4% tax free too.

The bit I need to know though is the government is going to give a tax credit for the first $1040 that a company pays. Is this starting at the begining (ie. next week) or only once they are forced to contribute in 2008.

[777]

CJ if you go to the IRD website below you can down load the file KS4 and reference is made in there that the date you want is 1/4/08.

http://www.ird.govt.nz/forms-guides/title/forms-k/ks04-guide-ks-employer-guide.html?id=righttabs

[lakeside]

quote:Originally posted by lakeside


quote:Originally posted by temuk

[quote]Originally posted by Rif-Raf

Anyone know of any comparisons being done between the various providers to see how their fees compare. (not just the default 6 either)

So who's good Gareth, Carmel, one of the big 6?


Had a look at gareth morgan web site and he does some comparisons
and some are charging twice as much as others.


http://forms.gmk.co.nz/calculators/providerfees.aspx?sec=2




GM comes in first and Westpac second although the differance lessens as the amount grows. 1% looks about the minimum charge according to the forensic accountants - I love it! I'm tempted to go with Gareth for the wifes one - what sort of fund is it - plenty of growth & overseas exposure?




I see ASB have cheaper fees on the face of it (.25vs .5) and they have been omited from GMs comparisons.

Also GM has a discounted fee for the first 2 years then it leaps up. 2% of the total or $200 minimum.

Wow these fees are huge and he's supposed to be the cheap one! I can see of you end up with a few hundred grand the fund manager is on the pigs back.

[lakeside]

So the Kiwisaver scheme begins in a fortnight, with still very few companies well informed on what to do.

Essentially, you need to download from the internet to have the process on paper in front of you.

Good saving in postage and printing, this method!

I am not going to be involved in Kiwisaver, not believing that my business has anything useful to add to the value of this form of savings.

But my views on it are simple.

1. If you afford to lock up 4% (minimum) of your wage, do so. The twin subsidies make it the best form of saving in time.

2. If you are aged 50 plus choose a mainstream provider (e.g. AMP) and choose a low-risk fund (cash or fixed interest).

3. If you are younger, choose someone like Gareth Morgan or Carmel Fisher, and trust them.

4. Most important. If you are already in a normal retail scheme unsubsidised by your employer, CANCEL ANY FURTHER PAYMENTS NOW.

5. If cancelling the awful schemes, previously chewing away at your expense, enables you to put 8% instead of 4% into Kiwisaver, go for it.

6. If you cannot afford to lock up any money now simply use bank call accounts for your collection point.

REPEAT: CANCEL ANY OF THE HOPELESS SCHEMES RUN BY THE LIKES OF Tower, AXA, AMP, unless they are subsidised by your employer or the government.

Some arithmetic.

Your are on 60k per annum.

You put in 8% each year.

You get credited, even with nil earnings from the fund manager:
Year 1.
4800 Yours
1200 Employer
1000 Tax-Payers Gift
1040 Tax Credit
8040 Total

Year 2.
4800 Yours
2400 Employers
1040 Tax Credit
8240 Total

Year 3.
4800 Yours
3600 Employers
1040 Tax Credit
9440 Total

Year 4.
4800 Yours
4800 Employers
1020 Tax Credit
10620 Total

So after four years you have put in $19200 and your account has in it $36,340.

If the returns are 4% p.a. you will have a credit of nearer $40,000.

BUT IF YOU CANNOT BALANCE YOUR BUDGET, FORGET IT.

Saving money is not the only consideration in life!

REPEAT

Non-subsidised superannuation schemes are now formally dead ducks. They never were anything other than moneyspinners for salesmen and fund managers.

They now MUST be cancelled.

Chris Lee
Managing Director
Projects Resources Limited

[CJ]

lakeside,

I think the ASB just repackages a index fund run by someone else so their fees should be lower.

GM has the option to increase to $200. he will onlly be able to do this if 1. other funds increase, or 2. his returns are that much higher that he can justify the larger fee.

The employer contribution while compulsory will be at the expense of a larger annual pay increase. An employer is only interest in total salary package, how that is made up is irrelenvant. there are however salary sacrifice benefits however plus hopefully employers will pass on the $1,040 annual tax credit they will receive for the contribution.

777 - thanks. I had some time last night to look it up. Came to post an anser to my own question this morning to find you had beaten me to it.

[lakeside]

quote:Originally posted by cantab

Anyone who gives $70m away to charity is good enough for me.


I'm in with GM (for the wife). His fees are the same as Carmel except she has 10% if she gets over the index, and he is going to get tough on non serious savers with the $200 min fee in a couple of years but they are similar.

Although Carmel is going to include international shares GM has an impressive record going back before the crash into the early 90's and I like the way he moves investments between NZ, overseas and growth / income as he sees the cycles.

And yes that Charity stuff - it has style!

[Halebop]

Gareth Morgan Kiwisaver's trust deed also has the option of increasing management fees to 3% from 1%. Should it happen you'd be able to transfer your savings to another provider.

I quite like GM's performance, particularly on the growth side. Also the scatter-plot disclosures illustrating the warts and all results is a vote for candour.

[minimoke]

[quote]Originally posted by lakeside

So the Kiwisaver scheme begins in a fortnight, with still very few companies well informed on what to do.
......
I am not going to be involved in Kiwisaver, ....

REPEAT: CANCEL ANY OF THE HOPELESS SCHEMES RUN BY THE LIKES OF Tower, AXA, AMP, unless they are subsidised by your employer or the gove


Lakeside
Kiwisaver starts on 1 July - not two weeks.

Your business WILL be involved with Kiwisaver like it or not. If you take on a new staff member from 1 July you have to sign them up.

And look at who the default providers are!!

[lakeside]

[quote]Originally posted by CJ

lakeside,

I think the ASB just repackages a index fund run by someone else so their fees should be lower.

Why is this CJ? Cos it's so passive or because they can bargain the 3rd party down with buying power?

Just got the news my AMP super is going from .375% managment fees to .6% fees - thats into three figures to manage my $20000 each year. What a business to be in!

[Tim]

Trying to work out who has the lowest fees. They are not all transparent. Many use fund managers and do not include their fees. Superlife looks good. On the kiwisaver site there should be a table to compare all and not just selected costs. At the end of the day or 30 years the provider with the lowest fee structure will be hard to beat.

[lakeside]

Who provides supersaver - looks like a non profit trust or government?
They come in about 1% just behing ASB on the GM comparison, so they are pretty good.

Medical assurance look good 1% apparently and they get ING to manage it. And you don't need to pay anything in until you pay PAYE.

www.workplacesuper.org.nz has been updated now - there are heaps more schemes.

[Halebop]

Kiwisaver Discriminates Against Older Workers (http://www.nzherald.co.nz/feature/story.cfm?c_id=1501206&objectid=10449088)

I guess in the same way pre funding the "Cullen" Fund (Future "age" related bills provided for a narrow demographic but funded by everyone today) discriminates against young people? If the wrinklies wanted a better defined pension savings scheme they could have voted against Muldoon and sorted it 30 years ago.

The front loaded benefits of Kiwisaver are modest in any case and the true value is 30 or 40 years of compounded savings provided by the wage earner, a feature oldies were unlikely to gain leverage from for obvious reasons. Besides, hands up who thinks Gen X and Y will get a state funded pension in 40 years time? I didn't like my chances before Kiwisaver came along, the odds now would be even slimmer.

[Arthur]

I have a love/hate relationship with Gareth. I can't believe that Gareth can keep pulling the wool over the eyes of so many, but then maybe they deserve it. For most, his Kiwisaver fees are the most expensive that I have seen, athough he does "discount" the first few years so that they appear low. It will be interesting to see how his Kiwisaver funds perform over the next few years. My guess is that a few years putting up with all the crap and having his performance in the sunlight will have him packing his tent.

[CJ]

quote:Originally posted by Halebop
I didn't like my chances before Kiwisaver came along, the odds now would be even slimmer.
This is my worry with Kiwi saver. It makes it pretty easy to give a means testing super in the future. No hiding the kiwisaver fund in a trust either.

[lakeside]

http://www.workplacesuper.org.nz/KiwiSaver%20Default%20Provider%20Fees.pdf

ASB looks good here too but I like ING 100% international equities. Balances my NZ money (not Bridge corp!)

[rmbbrave]

Choosing the right KiwiSaver fund with the lowest fees and best performance from the dozens on offer will give the average wage-earner enough extra money over twenty years to buy a brand-new luxury car when they retire.

The trick is knowing which one of the funds will make that kind of difference, and a website is being launched to provide that information.

�gSmartKiwiSaver www.smartkiwisaver.co.nz is the only place where intending Kiwi savers will find independent advice, information, and true comparatives for all the funds on offer�h, said the director of Trident Research Systems Mr Phillip Harris.

[skinny]

I'll probably go with superlife
http://www.superlifekiwisaver.co.nz/content/investments.aspx
http://www.superlifekiwisaver.co.nz/Resources/UserFiles/Documents/KiwiSaver%20membership%20form%20-%2002%20for%20employee%20-%2026.06.2007.pdf

Reasons being:

(1) they offer a range of investment options, including international passive index funds, YOU can choose any mix of at the outset and switch between at no cost - good for ppl like myself who think they know how to time the broad macro themes :D

2) fee-wise they are the cheapst game in town - e.g. the annual fee on the MSCI index fund is 0.35% p.a. of assets

3) A directior and founding member was Michael Littlewood who really knows his stuff.

[Tim]

skinny quite agree fees are transparent and the lowest, you can have all in international shares if desire. What makes the difference to returns long term is the fee structure and the % in shares. Which share is not as important if it is divewrsified

[lakeside]

superlife look good. They are .5% cheaper than anyone elseand that is off the total not the return so if 5% return they will be 10% better - 5.5% compared to anyone else.

Who are these guys?

[skinny]

Superlife (an offshoot of 'planit') have been offering workplace super schemes for quite a while - I have one dating back to 1998. It started as the internal scheme for Fletcher Challenge employees, bascially in response to the high fees in the funds mgmt industry and lack of index options at the time (not that that has changed a lot!!) A company was formed to buy out administration of the scheme from FCL and offer it to the broader public in the early 1990s.

One of the directors of superlife is Micheal Littlewood, who has a rather interesting article in this weekends Herald. http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10451503

I am familiar with his stuff more broadly through Auckland University's Retirement Policy and Research Centre, see
http://www.pensionreforms.com/

[rmbbrave]

Choosing the right KiwiSaver fund with the lowest fees and best performance from the dozens on offer will give the average wage-earner enough extra money over twenty years to buy a brand-new luxury car when they retire.

The trick is knowing which one of the funds will make that kind of difference, and a website is being launched to provide that information.

�gSmartKiwiSaver www.smartkiwisaver.co.nz is the only place where intending Kiwi savers will find independent advice, information, and true comparatives for all the funds on offer�h, said the director of Trident Research Systems Mr Phillip Harris.

Consumer Magazine has set up a great site too.

http://www.consumersaver.org.nz/

[foodee]

Whilst kiwisaver do not apply to us, I had a quick
look. My impression is that for those between 60+ and 65
there are some quick lollies to be picked up.;)

DYOR
cheers

[mccollr]

I have gone for Garath Morgan's Kiwisaver. http://www.gmk.co.nz/ (http://www.gmk.co.nz/)
Another one worth a look is the Fisher Fund or the NZ Stock Exchange.
Keepin it Kiwi

[Deev8]

... www.smartkiwisaver.co.nz is the only place where intending Kiwi savers will find independent advice, information, and true comparatives for all the funds on offer�h, said the director of Trident Research Systems Mr Phillip Harris.And with a subscription cost of $30, Trident Research Systems are hoping that lots of people will sign-up on the smartkiwisaver website.

[rmbbrave]

Children's KiwiSaver questions answered

Every New Zealander under 65 will benefit from joining KiwiSaver, including newborns.

But the rules – and how to make the most of them – are different for children, and many readers have questions about that.
Here are a couple:

"I want to start KiwiSaver accounts for my two teenage children. But I read that savers below 18 are not eligible to receive the $1043 per year member tax credits on any contributions. Is this correct?"

Yes. Children don't get the tax credits – nor compulsory employer contributions – till they turn 18.

But they do get the $1000 one-off kick-start, and that's why I recommend signing up children now. Who knows when a government might take that away?

Once they are signed up, if they hold or start a job, including part-time work, 4 per cent of their pay will go into KiwiSaver unless they take a contributions holiday.

Anyone can take a contributions holiday after they have been in KiwiSaver for a year or more – and Inland Revenue says it won't be difficult to take a holiday.

Still, it might be good to discourage that. Putting away 4 per cent of pay is a pretty good habit for teenagers to get into. That's how people on relatively low incomes end up retiring in comfort.

"Will kids or their parents have to make regular contributions to their KiwiSaver accounts to keep them open? And how much? Given we have four kids, regular contributions could be too much for us. But if it is only a small amount, we would be very interested. The account could serve as a great contribution for the deposit for their first home."

Though employee members have to contribute to KiwiSaver or take a contributions holiday, there is no government rule to say anyone who is not employed – including children – has to contribute regularly. True, some providers might insist on regular contributions. But the following providers accept lump sums: AMP, AonSaver, Fidelity Life, Gareth Morgan, Grosvenor, ING, SuperLife, Westpac and possibly others.

In some cases, there may be quite a high minimum lump sum, but at least some of these providers will accept a one-off payment of $5. You could, therefore, make quite small annual contributions to each child's account. The money would build up nicely over time.

Note though that the money is tied up till the child uses it to buy their first home or reaches NZ Super age (unless they emigrate permanently or face serious illness or financial hardship).

The money can't be used, for instance, for tertiary education. Some parents may prefer to do KiwiSaver minimally – contributing just a small sum at the start to get the $1000 kick-start – and make other savings for their children in more accessible accounts.

On the other hand, having money specifically aimed at a first home is no bad thing. Speaking – or should I say writing? – of which, to qualify for the KiwiSaver first home subsidy you have to contribute for at least three years.

The Government hasn't yet decided whether there'll be a minimum annual contribution, nor whether the three-year clock can start ticking when someone is under 18.

It may not matter much, though. Even if your child has to keep contributing from 18 to 21 to get the $3000 subsidy – or till 23 to get the maximum $5000 subsidy – getting them signed up now is a great first step to home ownership.

[minimoke]

RMB
There is really only one rule for kids. And that is "get your kids in it today"!

This is known as the Governments “Working For Families Special Dividend”

People may fret over what will happen when the kids turn 18 blah blah but anyone who thinks that Kiwisaver will in five or more years time look like it does today is dreaming.

So lock that dividend in today, reap the rewards of compound growth, sit back and enjoy a painless wee nest egg for the kids in the future. Don’t think they will end up wealthy from it because there is always the risk their fund may go bust but what the heck, its a no brainer really.

[777]

So if the Fisher Funds Growth Kiwisaver Scheme was to buy Kingfish Ltd shares at 1.36 (todays price) when they have an asset backing of 1.91 then they could value them at this higher figure and show a great return over a short period. Over time the kiwisaver fund could become bigger than Kingfish Ltd so they could do a takeover at a price somewhat less than the asset backing if the discount remains so high. If the discount value reduces then the kiwisaver side of things gain. A bit of a ramble but in a nut shell any buyer (including FFGKS) can buy 1.91 worth of assets for 1.36. Good way to start a new fund I would think.

Yup, you guessed it, I signed up with Carmel.

[tobo]

Does it strike anyone as a bit much that Carmel's performance fee (over the top of normal fee) not only is 10% but the threshold trigger is the 90 day bank bill rate, not some equity index.
I mean, come on, that 90 day bank bill rate is really high in NZ now, but in 5-10 years time, might be 4%, or 2%.
I want to buy shares in Carmel Kiwisaver Inc.

[bonito]

Hi all,

recently decided I should find out more about Kiwisaver. I have done a bit of reading and have decided to say no to kiwisaver. I am mid 20s, own no home.

Basically the benefits from kiwisaver for me would be...

~1K free from the govt each year + some saving from the tax breaks my employer contributions would give me.

You can get with your employer to pay their contribution to you instead of to kiwisaver when it becomes compulsory so their contributions are not really a gain you pay them yourself (you only gain on the tax break by joining).

Anyway I assume by the time I want to buy a house Me and partner? will be earning more than the max to make use of the housing aspect of KS so no benefit there.

I do lose control of my money for the best part of my life, who knows.. when i am 40 that extra cash might be useful in starting a business etc..

I also have to put all my KSings with one provider, wheres the diversification there ( i guess they should be doing that though). I have to pay them fees.

I am going to say no to KS and invest my own money on my own. At least then I can only blame myself if I get poor returns, and I can use my money when i want to.

[mccollr]

Hello Bonito
Great to see a young person taking responsibility for their own future. With an attitude like that you will be successful. You will need to take care of yourself in old age because as a country we will not be able to sustain the ratio of contributors to recipients.

But a couple of things you may wish to consider. By not taking part in Kiwisaver you will be doing yourself out of a 4% contribution of your employer. If you are not in you will not receive it.
Over 20 years of compounding this will be huge. The scheme is transportable and you can change the fund manager twice a year. There is a couple of Kiwi operators to look at Garath Morgan and Carmel Fisher who will provide an alternate to the multi nationals.

Anyway good luck.

[Zaphod]

I'm in almost the exact same situation as Bonito, and having sat down and "crunched the numbers" have also come to the conclusion that I am better off managing my own funds.

mccollr - You mentioned that "you doing yourself out of a 4% contribution of your employer". That is not necessarily the case. I know that unofficially, my current employer will taking the compulsory contribution into account when wage and salary negotiations occur. If Bonito is smart, he should be able to negotiate a 4% wage increase. If that money is wisely invested, he should be able to outstrip the returns of the KS fund managers.

I do however wholeheartedly agree with the two choices of KiwiSaver providers.

[mccollr]

mccollr - You mentioned that "you doing yourself out of a 4% contribution of your employer". That is not necessarily the case. I know that unofficially, my current employer will taking the compulsory contribution into account when wage and salary negotiations occur.

providers.

Valid points but as an employer of many people there will be no way we will be factoring the 4% into future pay rounds. This 4% has been imposed on us by the government and we will need to recoup this before we can give any to those that are not covered by the legislation.

[Te Whetu]

Valid points but as an employer of many people there will be no way we will be factoring the 4&#37; into future pay rounds. This 4% has been imposed on us by the government and we will need to recoup this before we can give any to those that are not covered by the legislation.

I have to admit that I'm not an employer... but this still seems flawed thinking. If you refuse to "unofficially" give extra to those not on Kiwisaver then they will almost certainly jump on board to Kiwisaver as the benefits are too large not to; and you will then have to pay the 4%. But if you could get them to stay off it with only 2-3% more pay it may be better off for both parties.

Then again I'm not certain, but seem to remember that employers get re-compensated for a portion of the 4%... is this correct? If this is the case, then could be better for employers to just have employees decide for themselves and not offer them more if they stay off.

In any case I would still prefer it if there was an option to manage your own funds. Could a Kiwisaver provider set up a system where a portion of your funds was directed by the investor? If it's possible then it will almost certainly happen eventually...

Also can't an employee can always just buy into some 'riskless' Kiwisaver provider and then just borrow using there Kiwisaver as security? Get the government bonus while in effect not contributing themselves. Alternatively short an index and have the Kiwisaver that follows that index. Problem with these options is obviously transaction costs etc.

Bonito this would solve your problems for when your 40 and want to access the money earlier... the transaction associated with borrowing would be more then offset by the x years of Kiwisaver contributions by the government and your employer.

Oh and... First post since the "no free account" was implemented. :)

[bonito]

I feel almost every employer would give the extra 4% one way or the other, would say that those who don't are being unreasonable. I would not work for somebody that would refuse this.

[ynot]

I like the look of superlife, especially the fact you can create your own investment mix.
Would anyone agree with my thinking that i could avoid property for next few years, and if so, what shares option group should i focus on.
appreciate any ideas.
I have 11 years till retirement age.

[rmbbrave]

Brian Gaynor: KiwiSaver will help to bring down the house
5:00AM Saturday November 24, 2007
By Brian Gaynor

It looks as if KiwiSaver, which has had a huge uptake, will have a radical impact on the country's savings patterns. This includes a reduction in our dependence on residential housing and an increase in investment in equities and other financial assets.

This could have a material impact on housing demand and prices while increasing the amount of funds available for non-property activities. These developments would bring New Zealand more in line with the rest of the world.

Individuals have two main types of savings - financial assets and residential property.

Financial assets are managed funds, individual share holdings, fixed interest securities, bank deposits, superannuation schemes and life insurance policies. Most of these assets produce income whereas owner-occupied residential property usually generates no income.

New Zealanders are more reliant on residential property than any other nation. According to Reserve Bank statistics we have 75 per cent of our gross assets in housing, which is well above most other countries.

Based on OECD statistics Italy is second with 66 per cent of household assets in residential property followed by France with 65 per cent. Australia has 57 per cent and three of the nine countries in this survey have less than 50 per cent. These are Canada with 48 per cent and the United States and Japan, with 39 per cent.

The Canadian, German, Italian and US housing percentages are slightly inflated because they also include durable goods owned by individuals.

The other point to note is that New Zealander's indebtedness, at 20.4 per cent of gross assets, is the highest of the nine countries. We allocate a huge percentage of our investment funds to residential property - which generates little or no income - and then have to borrow to maintain our lifestyle.

New Zealanders have always had a strong bias towards property and this has increased in recent years.

In December 1979, the first year of Reserve Bank data, residential property represented 58 per cent of total household assets but fell to 55 per cent just before the 1987 sharemarket crash as money poured into high-flying listed investment and property companies.

New Zealanders turned their backs on the sharemarket after the 1980s debacle and by 1990 residential property represented 65 per cent of total individual assets. The figure peaked at 76 per cent in December 2005.

New Zealand has had one of the biggest increases in exposure to housing over the past decade.

Since 1995 residential property as a percentage of total individual assets for New Zealanders has changed as follows:

* In New Zealand from 65 per cent to 75 per cent.

* In Italy from 67 per cent to 66 per cent.

* In France from 58 per cent to 65 per cent.

* In Germany from 65 per cent to 58 per cent.

* Australia has remained static at 57 per cent.

* In the UK housing has risen from 42 per cent to 53 per cent of total assets.

* Canada has gone from 44 per cent to 48 per cent

* The US from 34 per cent to 39 per cent and

* Japan from 52 per cent to 39 per cent.

New Zealanders have had a huge bias towards residential property because there is no stamp duty on this asset class, no capital gains tax, no land tax and operating losses on residential investment property can be deducted from other income for tax purposes.

In addition many of our largest listed companies have performed poorly and financial assets have often been heavily taxed, particularly managed funds until the introduction of the PIE regime on October 1.

Housing should be included in every portfolio but too much reliance on it causes problems for both individuals and the economy.

An over-reliance on property is not good for diversification, which is a core principle of well-structured investment portfolios. This lack of diversification makes New Zealand more vulnerable than most countries to a housing downturn.

Too much focus on housing also means that individuals can be asset rich but cash poor. This forces them to borrow to maintain their lifestyle or invest in high risk financial assets in order to extract as much income as they can from this asset class. This is one of the main reasons why a large number of elderly individuals, who had most of their wealth tied up in an owner-occupied home, invested in high risk finance companies.

This asset rich, income poor phenomenon also means that shareholders put a great deal of pressure on boards of directors to pay high dividends. This can put enormous strain on growth orientated companies, which should be re-investing most of their earnings back in the business.

For example Pumpkin Patch generated operating cash flow of $25.9 million in the July 2007 year, paid dividends of $14.4 million and spent $35.5 million on expansion, mainly overseas.

The group's overseas expansion was mainly funded by bank overdraft facilities, which increased from $13 million to $37.1 million during the year.

The corporate sector needs far more equity to fund its growth and shareholders must be willing to sacrifice short-term dividends for long-term capital growth. New Zealanders are not in a strong position to do this as households have financial liabilities of $152 billion compared with financial assets of just $186 billion, whereas in most other countries financial assets far exceed financial liabilities.

According to data released by the Australian Bureau of Statistics earlier this month Australian households have $1134 billion of financial assets and $733 billion of financial liabilities.

In other words the ratio of financial assets to financial liabilities in New Zealand is only 1.22 compared with 1.55 in Australia.

KiwiSaver should initiate a significant shift in savings patterns from residential property to financial assets with housing assets as a percentage of total assets probably peaking at around 75 per cent.

That doesn't mean that New Zealanders will stop buying houses but it does indicate that the weight of money that has flowed into housing - and pushed up prices - will abate and the residential property bull market has come to an end.

The other short-term factors weighing on the housing market are high interest rates, the slowdown in migration, and affordability issues as far as first time buyers are concerned.

The main issues in the medium term are the big uptake in KiwiSaver and the large number of post-World War II baby boomers who have little or no superannuation and are asset rich but cash poor. Many of these will be forced to trade down their residential property in order to generate sufficient cash to maintain their lifestyle.

This phenomenon could be more prevalent in New Zealand because of our relatively limited amount of financial assets.

KiwiSaver is an attractive development but individuals should be careful that they don't relay totally on this new innovation and owner-occupied residential property. This is because the latter usually generates no income and all KiwiSaver funds remain locked up until individuals reach 65.

The best savings strategy for most pre-retirement individuals is to have a mix of KiwiSaver, financial assets and residential property.

[minimoke]

The Government is very keen to see that any KiwiSaver product does not fall over. They don’t want to see Mums and Dads burnt from their investment as it is the Govts attempt to encourage people into a savings routine. What this means is that the KiwiSaver products have to be low risk, which in turn means the yields have to be low.

Lovegear I think your model is interesting except the 8.5% return is too generous. Try it at current bank deposit rates.


Any body been burnt by chasing higher promised yields only to see the recent drop in the equity markets shave off money that has been put in?

Other threads have been quick to knock Bluechip investors and those who put their faith in finance companies for the sake of more bang for your buck. Even the mum / dad property investor is running nervously at the moment. Will KiwSaver's learn a lesson?

The government has to be hoping the market starts to swing back again shortly otherwise expect to see National use Kiwisaver to its advantage in the run up to the elections.

[CJ]

I feel almost every employer would give the extra 4% one way or the other, would say that those who don't are being unreasonable. I would not work for somebody that would refuse this.

The govt will give the employer about $1000 and will also give you a $1000 (both matched ofcourse) so by not going in, you are out of pocket by up to $2k pa.

I am also interested in how employers will do salary negotiation. Can they give you a payrise conditional on you not entering kiwisaver? ie. say you wont go into kiwisaver so get payrise equivalent to 4%. then opt in. Can they then give you a pay reduction. Short term thinking but we are no longer in a job for life.

I have opted in and will probably try to defer contributions in the future. The kick starts the govt is giving it are just to good to turn down in the short term. Will also try to get out my own contributions when I buy a house, effectively leaving me with a superfund contributed completely by the govt and my employer.

have chosen the NZX sharekiwi as it is a low cost index.

Any flaws to my logic.

[minimoke]

Figuring the NZ markets have done there worst over the past few months just gone and signed the whanau up – lets just call it a Special Dividend returned to this frustrated tax payer. Had to balance risk of markets dropping further (think they will but not substantially) and govt fiddling with things in the Budget / election year.

[Grimy]

My wife has joined with Gareth Morgan Kiwi Saver and my son (14) is with Fisher Funds Kiwi Saver. I still have to decide who to go with.

[Mick100]

i'm looking into this kiwisaver thing

I'm self employed, mid forties and will have significant tax liabilties in the forseeable future

Could someone just sum up the advantages that I could get by joining kiwisaver - thanks

[minimoke]

Mick100
Depending on how you pay your self Salary Sacrifice is one area. Pay your self “less” and put the difference in as the “employer” contribution.


As the “employer” pay $20 a week and then claim this back from the tax payer.


Take the $1,000, make your personal contribution and get the tax payer to pay the same into your account.


Sign the family up for $1,000 each – perhaps even put them all on the payroll. Pay your self less. Get them to do some chores – pay them and an employer contribution of $20 and see the cycle continue. More people on your payroll the more you can get back on payroll tax reimbursements.


Loads of Kiwisaver seminars around. Try one in the Bay of Island during fishing season and up skill in Queenstown during the Skiing season.

[Serpie]

have chosen the NZX sharekiwi as it is a low cost index.

Can anyone tells me who offers this product? Can't find it anywhere.

[CJ]

Can anyone tells me who offers this product? Can't find it anywhere.

Go to www.nzx.com . they normally have a banner down the left side of the page. Basicially they invest into their own index funds which are listed on the NZX. In theory, this should make it a true low cost, diversified, and transparent (since investing in known listed securities). I am sure Mary Holme would be proud.

[CJ]

Mick100
Sign the family up for $1,000 each – perhaps even put them all on the payroll.

I think to use the employer rebate, it only works up to 4% of wages, otherwise SSCWT would be payable. Therefore, you need to put your kids onto a $25k salary which the IRD might look sideways at.

Can anyone confirm I am correct. Otherwise I might set myself up a few shelf companies.

[minimoke]

I think to use the employer rebate, it only works up to 4% of wages, otherwise SSCWT would be payable. Therefore, you need to put your kids onto a $25k salary which the IRD might look sideways at.

Can anyone confirm I am correct. Otherwise I might set myself up a few shelf companies.

On reflection you are right CJ. You are pretty safe paying 1% in 2008/09 for those earning less than $25k ( I think its actually closer to $23k). The $20 maxes out around the $100 k mark.

Will IRD notice - at this point the Kiwi Saver part probably not. They already have their hands full trying to respond to all the issues around KiwiSaver already. They also know the Automatic Enrolments aren't rolling in as much as they would expect. Other parts of IRD might but what you pay your staff is normally a business decision - not an IRD one.

[Crypto Crude]

Hey minimoke,
I found many reasons to not join Kiwisaver such as what bonito said... BUT I found plenty more reasons to join....and did so...
From a financial perspective It is the most savvy investment ever....
I found one loop hole so that I can cash it in before im 65....
Ive picked a conservative fund at Westpac, and I went against the banks advice by not going for the 'Growth fund'....
In periods of low growth, these funds have negative returns...
many of these funds are heavily weighted on national and international shares... Ive said it before about how important choosing the right portfolio is at the right time... when the bull arrives then switch funds...
....
In 5 years time, Kiwi saver will be compulsory... Incentives to join could be gone.... Sign up with these incentives now because in 5 years you willnot have a choice....
My dads in Kiwi saver not because he needs a retirement fund, but because his accountant said it is the most lucurative investment you will ever make.... 100% returns per year plus portfolio returns....
just make the minimum contribution and use part of it to buy a house....
Take that $1k from the Governement, contribute for the first two weeks and then pull out.... use the $1k, turn it into 10k in 20years... haha...
....
The only concern I have is that the general community does not have financial knowledge... This whole thing could be stuffed by losing the value of their scheme if their growth funds do not perform and inturn giving Kiwi saver bad press..... A growth Fund with 70% domestic and international shares is at some stage in the next 20years close to whipped out
:cool:
.^sc

[minimoke]

Hi Shrewd Crude
I hear where you are coming from and agree there is probably nothing out there that could beat the return on investment offered by Kiwisaver. But it is all based on smoke and mirrors – by which I mean a fast moving money-go-round of tax payer cash. I still remain philosophically opposed to the extravagant use of taxes and the propping up of a finance sector which does not deserve such largesse – and for this reason haven’t signed up myself.


Ever the pragmatist, I don’t see why my family shouldn’t benefit when I am being pig-headed – so I’ve signed them up to a high risk fund. I’m now sitting back expectantly waiting for the major parties to unroll their tax packages before I look much further into how I can distribute income. The Kiwisaver incentives can’t last forever but there is bound to be more goodies on the horizon this year.

[Serpie]

Thanks CJ.

I'm in a scheme already, but I'm looking for a different one for the kids, so will have a look at that one.

Cheers
Serpie

[CJ]

Hey minimoke,
I found one loop hole so that I can cash it in before im 65....

Is this a "I could tell you but then I would have to kill you" thing?

[Steve]

Is this a "I could tell you but then I would have to kill you" thing?


It appears that SC didn't bite! ;)

Personally, I employed myself thru one of my companies to join kiwisaver as a new employee on a miniscul wage while topping up my contributions to ensure the full member tax credit. I didn't want to 'opt in' at my main source of employment as this would absorb too much cash that could be better utilised elsewhere.

[777]

Steve would the fact that you are now a kiwisaver mean that all employment must contribute at the 4% or 8% rate. It is not as if you have 2 or 3 part time jobs that you can just elect to contribute via 1 of them.

[CJ]

Steve - just check the SSCWT point (I think they have stated calling this something else - simplification - but your accountant will know what it is).

777 - I though you could elect to join/not join on a job by job basis.

[777]

CJ I would have thought not but maybe I have got it wrong.

[Steve]

Steve would the fact that you are now a kiwisaver mean that all employment must contribute at the 4% or 8% rate. It is not as if you have 2 or 3 part time jobs that you can just elect to contribute via 1 of them.

If you voluntary 'opt in', it must be for all employment(s) existing at that point of opting in. If you start new employment(s), them you have the chioce for joining or opting out for each specific new employment without having your existing employment affected.

[Grimy]

My wife has joined with Gareth Morgan Kiwi Saver and my son (14) is with Fisher Funds Kiwi Saver. I still have to decide who to go with.

I've gone with SuperLife KiwiSaver. All cash/bonds (NZ bank/Govt) until things settle down on the markets a bit, then will move some to shares.

[Zaphod]

Now that the employer contributions are compulsory, the scheme is starting to look a bit more promising from my perspective, however it is all (as put earlier) smoke and mirrors since payraises have become much slimmer in anticipation of the compulsory contributions.

What disturbs me is the number of people claiming 100&#37;+ PA returns from Kiwisaver, and some of these claims are coming from accountants? Good grief!

[POSSUM THE CAT]

Zaphod in the first year on minimum contributions they are correct pay in $1040 get $1040 tax credit plus $1000 kickstart is well over 100&#37; return

[Zaphod]

Zaphod in the first year on minimum contributions they are correct pay in $1040 get $1040 tax credit plus $1000 kickstart is well over 100&#37; return

That is only the case in the first year and only if your 4% contribution amounts to the same value as the $20pw + kickstart (and shortly + employer contribution) that the taxpayer contributes. Subsequent years see a quick decline back to far below 100%.

This is not an investment which returns an ongoing 100%+ PA as claimed by some.

[POSSUM THE CAT]

Zaphod if you want a fine calculation on $20 or below per week if you work on per annum from contribution dates with the bonus $1000 and the continuing tax credits and a small allowance for capital increase you could come to roughly 100%per annum return averaged over 10 years. It is avery complex calculation and depends on dates when everything is paid.

[777]

Zaphod if you want a fine calculation on $20 or below per week if you work on per annum from contribution dates with the bonus $1000 and the continuing tax credits and a small allowance for capital increase you could come to roughly 100&#37;per annum return averaged over 10 years. It is avery complex calculation and depends on dates when everything is paid.

Can't agree Possum.

If you put $1,042 in per annum, get your $1,042 from the government and $1,042 from your employer and the one off $1,000 then with no return on the money you would have $32,260 total for an input of $10,420 after 10 years. No way this comes close to 100% return per annum.

Put simply if you invested one payment of $1,040 at 100% per year then it doubles each year so would end up at $1,067,008 after 10 years which is nothing like the $32,260 above. And that is just with one payment of $1,040.

I am with Zaphod on this one.

[POSSUM THE CAT]

777 you are compounding the total sums for evey year not working on your contributions when they were actually contributed. As I said it is not a simple calculation. It is a return on your money from when you paid it not on the total sum.

[Zaphod]

777 you are compounding the total sums for evey year not working on your contributions when they were actually contributed. As I said it is not a simple calculation. It is a return on your money from when you paid it not on the total sum.

Surely the overall return on investment (which includes the compounding sum) is more relevant measure to compare your return than the method used above which excludes the money already contributed.

From a personal perspective, I'm interested in the overall gain I receive throughout the lifetime of the investment.

[POSSUM THE CAT]

Zaphod they are working on the compounding return on your actual contributions to show the actual benefit to you this is common way of showing return on supplemented financial products.

[minimoke]

In Year One you can assume you’ll make fantastic returns – 100% + no trouble. Its further out that can ‘t be calculated.

The Tax payer contributions are not sustainable. They will be phased out. If not next year then perhaps the year after.

Fund fees will rise. Existing providers with high fees are already eroding your returns.

Returns on investment should not be assumed to be positive every year.

Employer tax credits are not sustainable – they too will disappear. This will put pressure in pay rises – so you need to factor in a lost opportunity cost from your pay.

Add in the cost of your time you will take when you move to another provider. You will move Providers and there will be a cost.

Jump in now while the goodies are there. If you leave it a year your returns won’t be as good as they could have been.

[Zaphod]

Zaphod they are working on the compounding return on your actual contributions to show the actual benefit to you this is common way of showing return on supplemented financial products.

That's a marketing tactic that provides a figure which bears very little resemblance to the actual value of the investment over time.

Minimoke - I agree, things will change in the future, and the overall benefit of the scheme is difficult to calculate due to the reasons you've outlined. My only comment on this is that people do need to think thoroughly about their circumstances and provider before making a decision. I have spoken with many who have rushed into the scheme.

[minimoke]

I have spoken with many who have rushed into the scheme.
There’s not too many problems rushing in at this stage. A person can stop contributions in a year and can change provider any time – hopefully they can afford their contribution and won’t get stung to badly by changing.

[Mick100]

what's the story with tax with regards to kiwi saver

I can't see anything in my tax return with regards to rebates etc

are their any tax advantages for the self employed with kiwisaver?

thanks
,

[777]

The rebate is paid direct to your provider. It has nothing to do with your tax return. It will be done some time after June 30th. The way IRD work it will be August or so before it happens. You don't even need to have an income to get the $1043 rebate. That is why children are signed up for it.

Plenty has been written about self employed. Just google it and look at IRD site.

[Mick100]

OK, thanks for your response

[CJ]

777 - I thought you had to be between 16 and 65 to get the rebate?

Mick - Mary Holme has covered self employed a couple of times in here NZH article I think. It depends on whether you are a PAYE or non PAYE self employed I believe (ie. if a shareholder/employee you can choose).

[777]

777 - I thought you had to be between 16 and 65 to get the rebate?

Mick - Mary Holme has covered self employed a couple of times in here NZH article I think. It depends on whether you are a PAYE or non PAYE self employed I believe (ie. if a shareholder/employee you can choose).


CJ I think you are right but at 16+ you still do not need to earn an income to get the rebate.

[fungus pudding]

CJ I think you are right but at 16+ you still do not need to earn an income to get the rebate.



I'm not so sure about that IRD match your contributions up to $2.86 per day. Which is $1000 plus $40.00 towards fees if you have been in a full year. So this year it will be less than the 1040 for a contributor if I understand it correctly.

[tim23]

I think you are correct on that one.

[minimoke]

There’s not too many problems rushing in at this stage. A person can stop contributions in a year and can change provider any time – hopefully they can afford their contribution and won’t get stung to badly by changing.
Look for the next Labour bribe to the voting public to buy a few more votes this election.

[minimoke]

have chosen the NZX sharekiwi as it is a low cost index.

Any flaws to my logic.

Not a bad call - but check out Gareth morgans web site calculator to reconsider your decision: http://www.gmk.co.nz/pages/content.aspx?PID=43

[tim23]

What bribe would that be? do you oppose Kiwisaver? If so why?

[minimoke]

What bribe would that be? do you oppose Kiwisaver? If so why?
Watch this space. My views are well canvassed on Kiwsaver through this thread. And the next bribe only reinforces those views.

[minimoke]

What bribe would that be? do you oppose Kiwisaver? If so why?
Mallard is proposing that Employers become liable to pay the employees’ contributions to KiwiSaver. He doesn't seem concerend about the significant extra costs to employer - just as long as teh Employees get a free ride.

From a remuneration strategy perspective he doend't seem concerend that employees who join KiwiSaver get paid 4% more than their non KiwiSaver workmate - with no opportunity for the employer to adress teh imbalance.

He is also looking at making employers with existing superannuation arrangements to pay KiwiSaver on top of those existing subsidies. Extra benifits to employees!

All in all voters cannot loose under KiwiSaver. But now it will not only be the tax payer who has to pay hte piper but also the employer.

[mondograss]

No, what happened was that employers were given a tax credit in return for their initial 1% contribution which came in a few months ago. Some employers pocketed the tax credit and then took the 1% contribution out of the employees wages. Wrong and unfair and so they changed the legislation to cover it.

Kiwisaver does have employer contributions increasing to 4% over the next few years, but it's not a new thing and it sits alongside the employee contributions, not instead of.

[minimoke]

Mondograss. You are correct – however I think you are referring to existing legislation rather than the proposed legislation which we will see in the next week or so.

[mondograss]

OK, will wait to see on that one then.

[tim23]

Minimoke - whats wrong with something thats benefits employees at least it'll get Kiwis thinking about investmentss other than property?

[minimoke]

Minimoke - whats wrong with something thats benefits employees at least it'll get Kiwis thinking about investmentss other than property?

Here is one reason that I’ve canvassed before. It has led employees blindly down a path towards financial riches – all on the back of the tax payer. Hah – or so the sheeple thought. How did the Kiwi saver schemes fare in the past week. I reckon they have lost a bundle of employee cash and tax payer handouts. This is on top of the likely negative growth since inception. And we can thank Michael Cullen and Labour for that!

And trying to get performance data is like trying to find a needle in a haystack. That on its own shoud be enough to have people worried.

[Year of the Tiger]

And trying to get performance data is like trying to find a needle in a haystack. That on its own shoud be enough to have people worried.

It will be interesting to see the reports put out by Super Funds across the board when they report to their clients.

I had an interesting situation a few months back where my super fund sent me through my half-yearly report. Well you can imagine what the performance would have been like from Oct 07 to Mar 08???
But no.!!!!! the company had a system glitch and could only report on the previous full 12 months (which looked so much more pleasing on the eye :().
I'm going to be very interested to see what they come up with for the next report... :mad:

YOTT

[shane_m]

I switched all my super in to a cash only fund earlier in the year, pretty happy with the outcome compared to my colleagues who decided to stick with the company superannuation fund.

[minimoke]

It will be interesting to see the reports put out by Super Funds across the board when they report to their clients.

The first significant report is in - the NZ Super Fund has lost 4.92% or $880m this past year.

[Yossarian]

Does anyone think National would cancel the 'matching' government contributions?

If so, would all of us Kiwisavers be well advised to make sure we have made a $1043 contribution (for the 08/09 year) prior to the election????

[Aussie]

I do not contribute to Kiwi Saver and am glad that NZ does not have a compulsory super scheme like Australia. It must be very frustrating to have a large chunk of your paycheck docked each week and plunged into falling markets . . .

[POSSUM THE CAT]

Aussie the Employer has to pay the super in Australia so the super does not get deducted from your paycheck there unless you agree to pay some in yourself as well as the employers 9%

[shane_m]

guys we have kiwisaver scheme in auzzi as well now, I am now in both kiwi and auzi saver schemes.

auzzi saver scheme is much better than kiwi saver model.

have a look here
http://www.ato.gov.au/individuals/content.asp?doc=/Content/00155253.htm

basically I am going 5000 in to it for 4 years and make 30,000 in 4 years. That is a guaranteed return of 50%.

investment is capped at $75,000. maybe I open account for mum and invest in it and make 100% in 4 years.

here is the calculator
http://www.fido.gov.au/fido/fido.nsf/byheadline/First+home+saver+account+calculator?openDocument

[Aussie]

Aussie the Employer has to pay the super in Australia so the super does not get deducted from your paycheck there unless you agree to pay some in yourself as well as the employers 9%

Thanks for the clarification POSSUM THE CAT. I'm an Australian who has not lived there in 18 years - 14 years in the US and 4 in NZ. My main concern with Kiwi Saver (as I understand it) is that it can't be self directed and I am glad that it is not compulsory.

[Crypto Crude]

I went into the defensive fund (conservative) and bought units for .9750 in the dollar, as I entered a few months after it started...
those units are now worth .9715...

Had I got into the high growth fund that unit would be worth .80

2009 is the time to get into high growth funds...
:cool:
.^sc

[minimoke]

I went into the defensive fund (conservative) and bought units for .9750 in the dollar, as I entered a few months after it started...
those units are now worth .9715...

Had I got into the high growth fund that unit would be worth .80

2009 is the time to get into high growth funds...
:cool:
.^sc

Shame you are on the loosing side – but no surprise really. Cullen was so keen to get people into Kiwi saver (a great tax payer expense) he didn’t have the forethought to consider the down turn in financial markets. NZ’r are bleeding all over the place and the government led NZers blindly by the nose to this blood bath.
I personally would have liked the option of a mortgage diversions type scheme where I could pay my mortgage off and get the tax payer to help. At the time KiwiSaver was set up I would have been making 10% net on my personal contribution alone – and thats without factoring the government / employer / tax payer contribution. That would have dropped down to around 7% now but still not a bad return and its guaranteed – and as easy as pie.

[Yossarian]

Shame you are on the loosing side – but no surprise really. Cullen was so keen to get people into Kiwi saver (a great tax payer expense) he didn’t have the forethought to consider the down turn in financial markets. NZ’r are bleeding all over the place and the government led NZers blindly by the nose to this blood bath.

I think you are looking at this the wrong way around. I see it as a good thing that there's been a big drop off in the first year or so of Kiwisaver's life. That will dramatically enhance prospects in the longer run, as it means that we can make larger portions of investment at cheaper prices.

If instead there had been a big bull run over 5-10 years (with people investing all the way up), then a big drop, the losses would be far greater.

So, I'm not worried, despite my 'growth' investment being off 30% at the moment!

[minimoke]

I think you are looking at this the wrong way around. I see it as a good thing that there's been a big drop off in the first year or so of Kiwisaver's life. That will dramatically enhance prospects in the longer run, as it means that we can make larger portions of investment at cheaper prices.

I’d sooner have the bull run up front. Say you invested $100 in kiwisaver and lost 30%. Your investment is now worth $70. This means on your current investment the market has to move by 42.8% and you are at back at break even point. Now, I have no worries about these aspirations – but me; I’d be happy with 10% guaranteed last year and 7% this year plus a few bucks from the tax payer. See, here’s me working and creating taxes so that your Kiwsaver provider can loose money. Some might think that’s OK. I don’t!

[Crypto Crude]

I am lucky to be in KS mini...
This crash has been good if you are in KS...
this scheme has only just started, those in the scheme would rather have front end losses rather than back end losses...
As we are contributing weekly or so, we are dollar cost averaging right?
good to be buying for the long term at cheap prices eah?
:cool:
.^sc

[minimoke]

This crash has been good if you are in KS...

I’m not sure if I follow the logic – you could say the same about property.
And KiwiSaver isn’t looking as good as it did. You’ve now lost your $40 a year fee subsidy. You’re now only going to get a 2% top up from the tax payer rather than the 4% previously and your employers contribution is dropping to 2%. Sharemarkets have plummeted and no sign of an immediate recovery. interest rates have dropped so not much to be made on deposits. Property - well you wouldn't want to see your provider invest there. Which leaves FX, Commodities (oil has plummeted – where is that oli shock again??) and whatever else your provider reckons is going to give you the growth you've been led to expect. Some of them are tightening up their ethical investments which leaves.....hm Carbon Trading. But only for as long as we all think the world is going to come to an end.

KiwiSaver punters no doubt trusted Labour that what they had is what they’d keep. A new government has put paid to that. And now we have National promising to keep the $20 a week tax credits, the $1,000 start up, mortgage diversion and first home help. But then National have only been in for a couple of weeks. There’s lots of time left in their term. You’ve been warned!

[Crypto Crude]

Minimoke,
The crash has been bad if you are in property because a newbie most certainly would have been bankrupted now...
KS is good because of dollar cost averaging... newbies are not buying houses all the time...
Its a good diversified savings scheme for me... my fund is at 2.5k and I govt has contributed 1k of that...
So what that contributions have been slashed...

I can get out of KS anyway, and put 5k towards a house, and up a subsidy on top of that for my first home...
KS smartest thing I ever did...
:cool:
.^sc

[shasta]

Minimoke,
The crash has been bad if you are in property because a newbie most certainly would have been bankrupted now...
KS is good because of dollar cost averaging... newbies are not buying houses all the time...
Its a good diversified savings scheme for me... my fund is at 2.5k and I govt has contributed 1k of that...
So what that contributions have been slashed...

I can get out of KS anyway, and put 5k towards a house, and up a subsidy on top of that for my first home...
KS smartest thing I ever did...
:cool:
.^sc

Um you still end up paying fees for some idiot fund to lose your money?

You'd be better off investing it yourself!

You just need the discipline to stick to a regular savings scheme...

I emailed Bill English asking for National to consider allowing SMSF's like Australia has...

Must still be working on it, as he hasn't answered yet (his secretary did acknowledge it).

Your meant to be the "shrewd" one :rolleyes:

[Serpie]

I'm with you on the merits of Kiwisaver Shrewdy.

I went to a few seminars on KS when it first came along, organised a rep to come and talk to my staff about the scheme, and heard all of the questions about the possible negatives. And I heard lots of people say why they weren't going to enrol.

And then I thought: what if Kiwisaver works exactly as it was designed to? What if my workmate opt out of KS, and I opt in - what will be the difference in our options and income on the day that we retire?

So I hooked on. I not missing the deductions, but I'm pleased that someone somewhere is taking that money and investing in something at today's prices. I'm still doing my own bits and pieces, but week in and week out that money gets taken and gets invested in something.

Maybe it will work, and maybe it wont. I dont know. What I do know for sure is that all of the people that I work with who decided not to take part in KS have not taken it upon themselves to commence a regular savings and investment plan with the funds that KS would've taken. Will they be kicking themselves when they retire? Will they be going to the government for assistance and getting told "we told you so"?

Shrewdy & I discussed forestry investments a while back, and I know from previous discussions that many of the posters here see that as a waste of money too. But I've got a block of trees that are now 5 years old and growing well, all paid for and completely oblivious to the current financial crisis. Like Kiwisaver, maybe they'll be worth something in 25 years and maybe they wont, but at least I'm doing something that may help to supplement my income when I retire.

I dont think you can have too many strings to your bow when it comes to planning for your retirement.

[minimoke]

...What I do know for sure is that all of the people that I work with who decided not to take part in KS have not taken it upon themselves to commence a regular savings and investment plan with the funds that KS would've taken.

Serpie, that, if for no other reasons, is a very good idea behind Kiwi saver. My objections to the scheme are throughout this thread – but one thing people may loose sight of is that you and all your work colleagues (even those non-kiwisaver people) are already paying into a compulsory superannuation fund. Its known as the Cullen Fund, with assets estimated to be around around $109 billion by 2025.

What we could perhaps have done was make KiwiSaver compulsory with a 2% employee contribution and the Cullen Fund would have enough loot in it to ensure everyone had a decent bit of cash coming in during their old age. The Cullen Fund already stashes aside around $1.5b a year. If we had a 2% compulsion that would be extra $1.3b a year. We wouldn’t even notice 2% because the govt could drop our taxes by 2% and then feed back into the compulsory scheme.

Say you had a fund worth $225b in 2025. 20% of the population will be retired which means they get to draw down from a $225,000 asset. Do you think you and your people at work could have saved $225k each by then?

[Serpie]

Do you think you and your people at work could have saved $225k each by then?

I'm guessing that's a rhetorical question, but for me to get $225k when I retire I'd need a compounding interest rate over my remaining 26 years (to age 65) of 7.9%.

One of the things that I liked about Kiwisaver (and there are things that I dont like) is the increased protection that it provides for my retirement savings over something like the Cullen fund. Communal super funds have been cleaned out before, but at least the Kiwisaver account is in my own name.

I'd prefer to be in a SMSF like those in Aussie, but until they come along I'll keep chipping away at Kiwisaver. It's not my main focus for retirement income, but if it works it will be a nice little bonus each week.

[minimoke]

I'm guessing that's a rhetorical question, but for me to get $225k when I retire I'd need a compounding interest rate over my remaining 26 years (to age 65) of 7.9%.

One of the things that I liked about Kiwisaver (and there are things that I dont like) is the increased protection ...
Yup –it was rhetorical as we know most of the workforce won’t save that amount.

I’m not so sure about your sense of security. My take on it is that Kiwisaver is actually less secure than a govt fund (though I suppose I should exclude ACC from the discussion at the moment) . Sure the Govt has set in place certain criteria that a Provider must meet – but at the end of the day there is no government guarantee that a KiwiSaver fund won’t collapse. I think the chance of a person loosing all their funds is remote – but there is a high chance that they could have done better elsewhere. And if we look to Australia we only have to look at someone like HIH Insurance to see how solid some of companies are.

[Serpie]

I’m not so sure about your sense of security. My take on it is that Kiwisaver is actually less secure than a govt fund

I'd probably have to agree with you there. I got a call from a new approved provider last week about switching my fund over, and to be honest I wouldn't touch the new one in this climate. But it did get me thinking about how secure my existing provider is, so I probably need to have a look at some of my options there.

Any suggestions for a secure provider anyone?

[minimoke]

Any suggestions for a secure provider anyone?
Very good question Serpie. Earlier in the thread the issue was around fees charged. Given the governments selection criteria I’d suggest all are equally qualified at loosing your money.

The thing that amuses me (in a disappointing kind of way) about fund mangers is that they say they can do a better job of managing your money than you can. In my naivety I’d think then that they would know where the safe havens are in turbulent times; and also know where the bargains are to be found in a difficult market. They are after all highly skilled and educated experts.



But no – they’re not. They are just like captains of an oil tanker. They take ages to turn their investments; they are at risk of piracy and from time to time will run aground. Its clear I am biased. I’m not into oil, nor am I into managed funds.

[Crypto Crude]

shasta
Um you still end up paying fees for some idiot fund to lose your money?You'd be better off investing it yourself!You just need the discipline to stick to a regular savings scheme...I emailed Bill English asking for National to consider allowing SMSF's like Australia has...Must still be working on it, as he hasn't answered yet (his secretary did acknowledge it).Your meant to be the "shrewd" one


haha... still the shrewd one shasta,
I bought units in a conservative fund at .97 per unit (off memory)... its now over .97....I went to the bank and they told me to go high risk fund...
and I said, "wait up, im the shrewd one"... hehe... nah I didnt say that... but I pretty much told the lady to take a hike...
some idiot is not losing my money... when the market changes I will switch ;to a high growth fund and make good returns...
I still control over 90% of my wealth....
KS was the&nbsp;3rd smartest financial&nbsp;decision I ever made...
The smartest financial&nbsp;decision I ever made was to invest in oil stocks...
and the 2nd smartest decision was to not buy a house when I was told too...

and to top it off... I got a beautiful kick start in KS with a 1k bonus...
I can get out of KS if I move overseas...
my dad is 4 years off retirement age, and even he is in kiwisaver for the obvious benefits even though he does not work...

perhaps this is one of the smartest financial decisions you could ever make...
what a dream...

[GTM 3442]

Kiwisaver is an attempt to move NZ retail money out of property. Unfortunately, Kiwisaver involves throwing the NZ small investor into the clutches of what we might call the "managed funds" industry.

Overall, this industry has a poor track record.

This industry is paid on the basis of funds under management, irrespective of performance.

You employ this industry to make you money. You pay when you gain, you pay when you lose. Not unlike paying a plumber to *not* fix a leak.

Seems a strange thing to do.

[minimoke]

The latest thing for Kiwisavers to consider is the longevity of their preferred provider.

So far it seems we have lost BNZ and Kiwisaver as providers - with their investments transferrring to IRD and then to a default provider. But others have climbed on the bandwagen so there are still 35 providers in an over saturated market.

[waikare]

The latest thing for Kiwisavers to consider is the longevity of their preferred provider.

So far it seems we have lost BNZ and Kiwisaver as providers - with their investments transferrring to IRD and then to a default provider. But others have climbed on the bandwagen so there are still 35 providers in an over saturated market.

With 35 providers in the market, suggests there is a $ or two to be made, with the exception of one I beleive the rest of the providers charge us a fee just to invest our money in fund that is already set up, and they get paid regardless of how the fund proforms. A nice little earner

[shasta]

haha... still the shrewd one shasta,
I bought units in a conservative fund at .97 per unit (off memory)... its now over .97....I went to the bank and they told me to go high risk fund...
and I said, "wait up, im the shrewd one"... hehe... nah I didnt say that... but I pretty much told the lady to take a hike...
some idiot is not losing my money... when the market changes I will switch ;to a high growth fund and make good returns...
I still control over 90% of my wealth....
KS was the&nbsp;3rd smartest financial&nbsp;decision I ever made...
The smartest financial&nbsp;decision I ever made was to invest in oil stocks...
and the 2nd smartest decision was to not buy a house when I was told too...

and to top it off... I got a beautiful kick start in KS with a 1k bonus...
I can get out of KS if I move overseas...
my dad is 4 years off retirement age, and even he is in kiwisaver for the obvious benefits even though he does not work...

perhaps this is one of the smartest financial decisions you could ever make...
what a dream...

How's the units going Shrewd? :rolleyes:

[p2r]

Kiwisaver still an excellent deal, and not have to spend more than 2% of salary.

Well looking back maybe the best Kiwisaver is the one that did best in the last year or so (in the hard times). Huljich maybe or Gareth Morgans.

I have found superlife are low fees, very flexible (17 options any percentage) and transparent.

If looking for some real growth Gemino is their most interesting fund. $20 000 in this could do some serious growing. State Street does their overseas shares. Not sure if I like all Forsyth BArrs choices for NZ & Aus but includes some Sharetrader classics eg BUL!
http://www.superlife.co.nz/PDFs/Investment%20portfolios/Gemino.pdf

[minimoke]

I hear my local mall has a clown / magician doing tricks while at the same time getting kids to sign up to Kiwisaver. Its a sad state of affairs when you get a blow up ballon animal in exchange for a Kiwisaver sign up.

[Steve]

The clowns at IRD are still haven't transferred over my contributions from a year ago! :mad:

[Serpie]

I had a meeting with my insurance broker today, who also organised my Kiwisaver scheme, and was pleasantly surprised by how much is in there now.

When I signed up in November 2007 I did so because I liked the fact that I never saw the money, so wouldn't miss it. Sure enough - have adapted to life without it, and it's building into a nice little nest egg.

Still 25 years to go until I turn 65, so anything could happen (yes - I'm aware of that) but so far so good!

Hooking the kids up this week. Why not - worth a crack.

[ENP]

Why wouldn't you sign up to Kiwisaver?

I get a minimum 276% return on my money each year ($40,000 contributing 2% and topping up).

They also give me $1000 for free and another $5000 for free when I want to buy a house. :)

[CJ]

Why wouldn't you sign up to Kiwisaver?

I get a minimum 276% return on my money each year ($40,000 contributing 2% and topping up).

They also give me $1000 for free and another $5000 for free when I want to buy a house. :)
That boost only relates to the contributions that year. For money already in the fund, you are relying on the fund to perform, not the govt handouts.

Also it is trapped till retirement with few exceptions, buying a house being one though I wouldn't plan on that $5k being around in 5 years.

Just yes, i agree it is a good idea to go into. It makes a good base of which to do other things with your spare cashflow.

[minimoke]

Why wouldn't you sign up to Kiwisaver?

I get a minimum 276% return on my money each year ($40,000 contributing 2% and topping up).

They also give me $1000 for free and another $5000 for free when I want to buy a house. :)
Troll this thread for my reasons.

And don't get sucked into thinking Kiwisaver is giving you $1,000 and $5,000 for free. Its the taxpayer who is creating the income to pay the taxes to give you this benifit.

[minimoke]

With 35 providers in the market, suggests there is a $ or two to be made,
Now down to 33 which suggests that there isn't the $ or two to be made. Look for more consoldition coming up.

[CJ]

Now down to 33 which suggests that there isn't the $ or two to be made. Look for more consoldition coming up.Some of the default providers are huge but the smaller ones are struggling to get money. I wonder what the overheads are when you have attracted less than $1m in funds.

More funds will be able to be supported in the future as if they can invite people to shift, they will bring all their kiwisaver with them (ie. in 10y, people should be over $50k each). At the moment, there is probably a lot of investors with less than $5k. Eg. with Gareth Morgans fund, after an initial introduction period, I think you get stung for fees unless you have over $50k in there.

[ENP]

Its the taxpayer who is creating the income to pay the taxes to give you this benifit.

I pay the same tax no matter what. So why does it matter if the tax payer is paying for it? I'd rather get taxpayer money in my investments than have it pay for other things government spends money on.

[minimoke]

I pay the same tax no matter what. So why does it matter if the tax payer is paying for it?
If there wasn't Kiwisaver you'de (theoretically) pay less tax which you could put to your own super fund.

[ENP]

If there wasn't Kiwisaver you'de (theoretically) pay less tax which you could put to your own super fund.

Yea theoretically, but if only half of the people in NZ is in kiwisaver, then basically, someone else is helping out my kiwisaver investment with their tax.

Theoretically... yes... in reality... no. Take my free money while I can get it!

[CJ]

Yea theoretically, but if only half of the people in NZ is in kiwisaver, then basically, someone else is helping out my kiwisaver investment with their tax.

Theoretically... yes... in reality... no. Take my free money while I can get it!Agree. This favours the rich that can afford to contribute. My guess is it will go very shortly which will allow lower headline tax rates.

[winner69]

so all reported kiwisaver returns might not be 'kosha' ..... dreadful

http://www.stuff.co.nz/business/3300366/Peter-Huljich-funds-under-fire/

[minimoke]

so all reported kiwisaver returns might not be 'kosha' ..... dreadful

http://www.stuff.co.nz/business/3300366/Peter-Huljich-funds-under-fire/

And in that article we see the same old words appear: "related party". Theres a yellow flag of warning

[p2r]

My wife has been in since 2007. She has no income. The balance is $5400. We have paid in $2800 kick start $1000 Govt paid $2100 Will match it) and I have lost $400 - my fault and $88 fees but $80 fee subsidy.
It would be even better if she had the income 2% matched by her employer.

The kids $1000 is now $1100 but I wouldn't do it now the fee subsidy is gone so you need to make $30-40 a year to match the fees. They go to no tax in April though.

I have not been in so long but have paid in $1300, plus the kickstart $1000 and the employers $1300 and still the $1000 from the government to go in.

I can't see why you guys are down on Kiwisaver. Especially when you can get some really transparent funds like superlife or legends like GM to look after it.

I have them all about 25%cash, 25%NZ bonds, 25% o seas govt bonds and 25%o seas bonds at the moment which seems good with the falling dollar.

It's nice to have some conservative balance when I have a few shares.

[minimoke]

My wife has been in since 2007. She has no income. The balance is $5400. We have paid in $2800 kick start $1000 Govt paid $2100 Will match it)

How is this possibly a good deal?
Total inputs are $5,900 and its now worth $400 less.

But look at the inputs.

You paid in $2,800 2 or three years ago. That is money you could have used to pay down your mortgage (at say a 7% net return componding PA) or you could have put it in the bank and made some.

The Tax payer has worked hard to create $1,000 in taxes to give to you - and you've now gone and eroded that effort. Perhaps the tax payer might have liked that $1,000 for themsleves - but that would have meant the hard worker getting more reward for their effort. Instead under Labour we had the non worker (with all due respect to your wife) sucking off the tax payer teat.

If thats not bad enough you then gouge the tax payer for another $2,800. Today Key is pondering how to reduce personal taxes and raise tax revenue. Well its no wonder when you have non workers being given money hand over fist. And if thats not good enough you get to play with that money and you get to loose it - no skin off your nose because its not your money - it was the tax payers.

As for your employer, that was s $1,300 the shareholders don't get to see. Where is their reward for injecting capital into a business and taking the risks. How can they now invest $1300 in R&D or new plant? Oh no, you just get to clock in and out and your company's shareholders will cough up. Hows that a good deal.?

[winner69]

so all reported kiwisaver returns might not be 'kosha' ..... dreadful

http://www.stuff.co.nz/business/3300366/Peter-Huljich-funds-under-fire/

and todays paper says these huljich operated funds are now the bottom of the heap .... but as the man said in the paper it often happens to high flying funds so don't worry

[CJ]

Minimoke - i agree with your throughs re the kickstart and annual top up. They should go.

re employer contributions, it is normally determined as part of a salary negotiation to no loss to shareholders.

But remember you are thinking from an economy or business point of view. P2R is looking from a personal perspective so $2,800 into $5,400 in 2 years is good wouldn't you agree?

[minimoke]

re employer contributions, it is normally determined as part of a salary negotiation to no loss to shareholders.

But remember you are thinking from an economy or business point of view. P2R is looking from a personal perspective so $2,800 into $5,400 in 2 years is good wouldn't you agree?
Employer contributions are on top of REM not part of REM. An employees pay cannot be reduced if they are a Kiwisaver member. Total salary costs (Salary + Kiwisaver) is a business expense that reduces net profit - so it is a loss to shareholders.

As for P2R's personal perspective, which is ultimatly a community wide selfish perspective and a perspoective that is moulding on a vote catching strategy by Labour) then yes it is a great scheme - and employees would be foolish not to belong. That it is good for the individual does not mean it is good for business or the economy. And given that it is primarily business that is funding Kiwisaver it ought to be good for business as well!.

There is some irony (IMO) that government trusts the NZ Finance industry to do the right thing. Experience over the past few years (indeed for many years) shows that trust is misplaced. But as we also know there is no risk to the government - its just the poor old tax payer that will ultimatly carry the loss one way or another.

But while P2R might think he's doing well he needs to go to bed knowing he's propping up schemes like the Law Retirement Scheme. In 3 years its only managed to get $1.65m from its members. How is that viable compared with ASB scheme with $856m in funds?

[beacon]

How is this possibly a good deal?
Total inputs are $5,900 and its now worth $400 less.

But look at the inputs.

You paid in $2,800 2 or three years ago. That is money you could have used to pay down your mortgage (at say a 7% net return componding PA) or you could have put it in the bank and made some.

The Tax payer has worked hard to create $1,000 in taxes to give to you - and you've now gone and eroded that effort. Perhaps the tax payer might have liked that $1,000 for themsleves - but that would have meant the hard worker getting more reward for their effort. Instead under Labour we had the non worker (with all due respect to your wife) sucking off the tax payer teat.

If thats not bad enough you then gouge the tax payer for another $2,800. Today Key is pondering how to reduce personal taxes and raise tax revenue. Well its no wonder when you have non workers being given money hand over fist. And if thats not good enough you get to play with that money and you get to loose it - no skin off your nose because its not your money - it was the tax payers.

As for your employer, that was s $1,300 the shareholders don't get to see. Where is their reward for injecting capital into a business and taking the risks. How can they now invest $1300 in R&D or new plant? Oh no, you just get to clock in and out and your company's shareholders will cough up. Hows that a good deal.?

If only more people could see through this money go round that beggars the economy generally. But no, we are hell bent on fixing what needs no fixing, while turning a blind eye or paying lip service to where the real challenges for national prosperity lie ...

[ENP]

Screw the taxpayer, the economy and my employer. I'm in kiwisaver for me and me only.

Why should we care what effects it has, I'm laughing all the way to the bank with kiwisaver (well in another 44 years when I get my money back I will :))

[minimoke]

Screw the taxpayer, the economy and my employer. I'm in kiwisaver for me and me only.

And a relief it is to know that we can build a great country and try to compete with Australia with a backbone of great citizens such as yourself ENP.

[ENP]

And a relief it is to know that we can build a great country and try to compete with Australia with a backbone of great citizens such as yourself ENP.

Glad to help :)

[AMR]

I thought we lived in a capitalist country - Adam Smith did say that when an individual pursues his own self-interest he indirectly promotes the good of society. By investing in kiwisaver ENP won't be relying as much on the government pension in the future.

I personally view Kiwisaver as an insurance scheme of conservative equities that allows me to invest in high risk ventures (i.e luxury apartments in Nairobi) without fear of being out on the street when I am older.

[winner69]

I thought we lived in a capitalist country - Adam Smith did say that when an individual pursues his own self-interest he indirectly promotes the good of society. By investing in kiwisaver ENP won't be relying as much on the government pension in the future.

I personally view Kiwisaver as an insurance scheme of conservative equities that allows me to invest in high risk ventures (i.e luxury apartments in Nairobi) without fear of being out on the street when I am older.

..... being on the street when you retire .... sounds like you'll always have an apartment in nairobi

[minimoke]

I thought we lived in a capitalist country - Adam Smith did say that when an individual pursues his own self-interest he indirectly promotes the good of society. By investing in kiwisaver ENP won't be relying as much on the government pension in the future.

If we lived in a capitalsit country we would see more seperation of government from economics. But here we have governement heavily involved in productivity and compulsory wealth re-distribution. Indeed Kiwisaver suggests we actually live in a Socialist country.

If you want to quote Smith didn't he also reckon we shouldn't rely on the benevolvence of the butcher and baker. I'm at a loss to understand how someone can sit at home, be "non productive" yet adds value to the commodites produced and sold to create the taxes to pay the Kiwisaver.

Lets be clear - ENP is not investing in Kiwsaver. He is making some contribution - but by far the biggest contributor is others. It could equally be argued that if he kept more of the income he earnt he'd be able to invest himslef and b eless reliant on a tax peyer pension. Kiwisaver isn't about a hand up - its about an hand out.

[beacon]

I'm at a loss to understand how someone can sit at home, be "non productive" yet adds value to the commodites produced and sold to create the taxes to pay the Kiwisaver..

The other side argues that they are consumers. Consumers help money go round.


Kiwisaver isn't about a hand up - its about an hand out.

Agree. If it tastes like egg, and feels like egg, and looks like egg, it is egg. But on whose face?

I believe though that Kiwisaver is however, predominantly a better initiative from Labour compared say to the straight dole, in that it promotes savings and investment versus consumption. Also, in that the continuous money flows will make our capital markets more mature, liquid and deep, regardless of the many failings the system has. Also, in putting the choice of scheme/provider through to end subscribers the Government has forced at least some savers to do more study.

Accepting that it is a partial handout, I find it novel that it IS a PARTIAL handout - almost a partnership, albeit unequal - between the contributor and the taxpayer - with the latter helping the former make a start towards disciplined savings and hopefully informed investment versus promoting the ethos that society owes you and your future generations, regardless of any contribution you may or may not make.

[minimoke]

The other side argues that they are consumers. Consumers help money go round.


But wasn't the original tax payer a consumer as well? In which case perhaps they are in a better position to decide how to spend the money they have earnt rather than leave that decision to a person who didn't earn the cash - so arguably has no right to that cash.

I'm not sure this is better than the dole either. Arguably a person on the dole is at least looking (theoretically) for work so has a greater entitlement to tax payer cash than a person who isn't.

[beacon]

Sound arguments.

[ENP]

Minimoke are you in kiwisaver?

[CJ]

I'm not sure this is better than the dole either. Arguably a person on the dole is at least looking (theoretically) for work so has a greater entitlement to tax payer cash than a person who isn't.In my opinion means testing is on the horizon. Therefore there is a payoff to the govt as they will no longer need to pay super for a bulk of the population.

It is actually a clever way by the govt to ensure wealth is built up in an individuals name rather than in trusts which are much more difficult to means test.

[minimoke]

Minimoke are you in kiwisaver?
No - I haven't been lured into it.

[ENP]

No - I haven't been lured into it.

So your purpose in this discussion is?

[minimoke]

So your purpose in this discussion is?
I wasn't aware that being a Kiwsaver member was a pre-requisite for discussing the pros and cons of such a scheme. On the Mods advice that it is, rest assured I'll be up for a decent round of self flagellation and non-stop reading of Mary Holm columns this weekend!

[ENP]

I wasn't aware that being a Kiwsaver member was a pre-requisite for discussing the pros and cons of such a scheme. On the Mods advice that it is, rest assured I'll be up for a decent round of self flagellation and non-stop reading of Mary Holm columns this weekend!

I've never seen anyone so interested in kiwisaver that is also so against it.

Oh well, have fun.

[ENP]

And I don't want to hear about what kinky self flagellation you get up to in the weekends, but thanks.

[minimoke]

I've never seen anyone so interested in kiwisaver that is also so against it.

Oh well, have fun.
I'm also intersted in, say, global warming, and also against it. Doesn't prevent me from considereing the issues and expressing a view. I also have an interest in related party lending, prospectus information, the behaviour of directors (to name a few) - all of which I am against some aspects. Best to have an open mind on such things I find.

[ENP]

I'm also intersted in, say, global warming, and also against it. Doesn't prevent me from considereing the issues and expressing a view. I also have an interest in related party lending, prospectus information, the behaviour of directors (to name a few) - all of which I am against some aspects. Best to have an open mind on such things I find.

Fair enough. Obviously we have conflicting views about kiwisaver, I'm going to leave it at that as I think our little argument wasn't getting anywhere.

[Steve]

And in that article we see the same old words appear: "related party". Theres a yellow flag of warning

Didn't Peter Huljich use to hang around on Sharetrader a few years back?

[CJ]

I've never seen anyone so interested in kiwisaver that is also so against it.He is interested in it because as a non kiwisaver, his tax dollars are going to those screwing the system.

Kiwisaver is only far if compulsory. Otherwise it is a transfer from those that dont save to those that do - a reverse robin hood really.

[ENP]

He is interested in it because as a non kiwisaver, his tax dollars are going to those screwing the system.

Kiwisaver is only far if compulsory. Otherwise it is a transfer from those that dont save to those that do - a reverse robin hood really.

If you can't beat em, join em...

[CJ]

If you can't beat em, join em...The problem it is locked in until retirement and you dont know what changes they will make before then.

Imagine a socialist government getting power and nationalising it!

Disc: kiwisaver investor

[ENP]

If you don't want to join then stop complaining.

[CJ]

If you don't want to join then stop complaining.As a taxpayer, he has the right to complain.

[ENP]

So what are you complaining about? That I, and the other people in kiwisaver are reeping the rewards of your taxes?

It's really no different than me using your taxes making up fake injuries to the physio to get the benefit.

[Year of the Tiger]

So what are you complaining about? That I, and the other people in kiwisaver are reeping the rewards of your taxes?

It's really no different than me using your taxes making up fake injuries to the physio to get the benefit.

There is a slight difference here, with one you could end up with the financial benefit of "time served", and the other you could end up with an unforgettable life experience from "time served".

YOTT

[ENP]

Are you trying to say that I'll go to jail for making up fake injuries? Everyone I know does it, sports doctors endorse it, physios love it as it keeps them in business and me paying less fees, all covered by the tax-payer.

[minimoke]

So what are you complaining about? That I, and the other people in kiwisaver are reeping the rewards of your taxes?


Lets be clear. You and others are not reaping the rewards of our taxes. You are reaping the rewards of our blood, sweat and toil.

[CJ]

So what are you complaining about? That I, and the other people in kiwisaver are reeping the rewards of your taxes?

It's really no different than me using your taxes making up fake injuries to the physio to get the benefit.Fraud - not your best arguement.

Taxes should be directed to those that need it.

[ENP]

Lets be clear. You and others are not reaping the rewards of our taxes. You are reaping the rewards of our blood, sweat and toil.

Explain please?

[ENP]

Fraud - not your best arguement.

Taxes should be directed to those that need it.

Everyone does it... Yes, taxes should be, but in reality, everyone is in it to benefit themselves and rip off the system. People at uni whos mum and dad owned a $10 million dairy farm got the student allowance because their parents wern't earning a wage. Unfair. I'm much younger than you and I relaise people rip off "the man" everyday, why can't you realise this too?

[minimoke]

Explain please?
Its not hard. I work hard. I earn money. I pay tax. You get free Kiwisaver.

[minimoke]

Are you trying to say that I'll go to jail for making up fake injuries? Everyone I know does it, sports doctors endorse it, physios love it as it keeps them in business and me paying less fees, all covered by the tax-payer.
Again a simple answer: Yes!. A tad off topic but last year a person (an IT Consultant) was jailed for two and a half years for making up a bogus back injury. He lied seven times to get med certs for a $20k scam.

You might want to reconsider the world you walk in. Your mates are going to expose you to risk - the results you may not appreciate when Bubba sees you coming in your new prison garb.

But a postive will be you'll be able to keep up with the news - though it may not be seated comfortably in one of those prison loungers. Physios are no longer so impressed with ACC - they have lost the "free" treatment subsidy so look for a few of them to go out of business. When you start earning you'll be paying more ACC fees (not less) as the Earners rates go up this year. Or on the off chance you own a car or motorbike - these rates are going up as well. No doubt one of the reasons for the increase is that your mates are ripping the system off. Thanks for that!.

[CJ]

Everyone does it... Yes, taxes should be, but in reality, everyone is in it to benefit themselves and rip off the system. People at uni whos mum and dad owned a $10 million dairy farm got the student allowance because their parents wern't earning a wage. Unfair. I'm much younger than you and I relaise people rip off "the man" everyday, why can't you realise this too?Your sense of entitlement is worrying.

Just because everyone is doing it doesn't make it right - insurance fraud, whether it be ACC injuries or the 'ipod' that was stolen with the car, is still fraud.

I agree with the farmers comment. They are exploiting a loop hole. They are probably getting WfF as well. This should be stopped. Lets hope there is something on this in the Budget.

You are not much younger than me, but you are right - you are a snotty nosed kid who wants everything handed to him - but this will not make you rich. Get a job, earn your own money, invest your own money. This will make you rich.

[minimoke]

I agree with the farmers comment.
Again a bit off topic - but the $10m dairy farm is probably carrying a $10m debt. Added to that debt is money borrowed to buy fonterra shares. Just cos he's got a $10m farm doesn't mean hes worth $10m.

[CJ]

Again a bit off topic - but the $10m dairy farm is probably carrying a $10m debt. not all farmers are carrying that much debt. Alot would have inherited from their parents etc or bought prior to the recent bubble. But since we are both making sweeping generalizations, we are both correct.

Now, back to Kiwisaver and our right to handouts from the Govt regardless or wealth or need.

Disc - I am maximising my handouts so call me a hypocrite.

[minimoke]

But since we are both making sweeping generalizations, we are both correct.

Perhaps we are both correct - but clearly ENP is mis-informed. Most owner / operated farms are small farms and the number of owner operators is reducing over time - suggesting the Mom/Dads aren't handing the farms over to the kids. Indeed the number of farms is reducing - the trend being towards larger herds. The national average sale value is only $2.5m. So how many parents do we think are out there owning $10m dairy farms. Not a lot I'd suggest. I reckon ENP, rather than than thinking the parents are ripping the system off should be learning from these students parents and trying to figure out how they came to amass such assets. But theres clearly no point in leaning how to grow wealth when you are content sucking off a tax payer teat. No surpise there really when students get interest free loans - clearly some are under the impression the world owes them.

[ENP]

Its not hard. I work hard. I earn money. I pay tax. You get free Kiwisaver.

If your so pissed off then join it...

[AMR]

Fraud and illegal activity is definitely bad.

But if it's fully legal, fully sanctioned by the government, then why not?

PS If their parents are not paying themselves a fair wage it could be deemed tax avoidance.

[CJ]

If your so pissed off then join it...

Ok. But step back and think philosophically - should the govt be providing a subsidy to those that are not in need.

Surely the answer is the same as should the govt be providing student allowances to parents with significant wealth who can structure their affairs.

Re AMR's comment on the farmers, depending on the outcome of the Hooper and Penny cases in the court of appeal (the surgeons who structured their companies and 'avoided' tax), farmers could be the next 'profession' on the radar. Similar to the Property developer who never drew a salary but did withdraw $4m in loans - ruled tax avoidance by the TRA. Now if he had a kid who was receiving a student allowance, does this get reclaimed as well???

[minimoke]

But if it's fully legal, fully sanctioned by the government, then why not?

Just because it is legal and fully sanctioned does not necessarily make it right. Take for example ministerial housing allowances or life time free travel for ex-Ministers. Are interest free student loans right? Well they are legal but clearly if the result of them is people thinking that there is this endless supply of free money then they are wrong. It is now leglal to create an Emmissions Trading Scheme to save the polar bears and the grandchildren - but the very fabric uopn which that argument is based is now so fatally tattered that it doesn't make it Right.

[minimoke]

(the surgeons who structured their companies and 'avoided' tax),
By ENP's reasoning it its legal its OK. So we should all be doing our bit to avoid tax and avoiding as much as we can since it is quite legal to avoid tax. Is ENP supporting the family of the $10m dairy farm or not?

[CJ]

By ENP's reasoning it its legal its OK. The IRD have just argued it in the Court of Appeal. the decision is pending. If the IRD wins, then it will be deemed illegal and the fall out could be huge.

If you need a bit more background on the Penny and Hooper cases, there is a good thread at the PropertyTalk forum:

http://www.propertytalk.com/forum/showthread.php?t=24643

This doesn't seem to have been raised on this forum but maybe we should start a new thread if you want to discuss as this is getting of the Kiwisaver topic.

ENP - lets put it another way. If you were redesigning the tax system (as Key and English are currently doing), would you reduce taxes and reward hard work or would you provide subsidies that may encourage increased savings but most likely most of those people would have been saving anyway.

[Stranger_Danger]

I am gobsmacked after reading through the recent pages in this thread.

The ideas that

(a) It is ok to take other people money if the Government mandated it. I'm entitled.
(b) Everyone else does it, so why shouldn't I?
(c) If the Government says it is ok, it must be ok.

are repulsive to me.

A large percentage of the population now think like that, and be under no illusion how dangerous it is.

A question for all in this thread to ponder

"If the Government passed a law that said you can have a million dollars and, at the same time and in return, a family in a different city that you've never met will be executed, but other than their death which you will play no direct role in, there will be no consequences for you, you have the million dollars clean and can carry on with your life. Would you take the money?"

Note that

(a) You'd be taking what you are entitled to.
(b) Whilst the other family died, you didn't kill them.
(c) The Government said the deal was ok, in fact they offered it to you.
(d) There is an argument that someone else would take the deal and the other family would die anyway, therefore, why not take the money?
(e) You don't know the other family anyway.

Think about the question.

Answers anyone? ENP?

[CJ]

Stranger Danger - I think your example is a bit extreme.

Kiwisaver was introduced to encourage people to save. If people do it only for the govt subsidy, the Govt is achieving what it set out to do. If they stopped the subsidy, I would stop contributing (but would keep investing elsewhere).

ENP ACC fraud example is a bit more worrying (though we all know it happens). The govt has decided people should get a subsidy for accidents, but no subsidy if it isn't an accident. The probable reason fraud is rampant is because very few injuries are self inflilcted and are therefore an accident whether we know what the accident was or not. Should someone who injures their back playing ruby get provided cover where the person who injures their back by sleeping on a poor quality bed (technically not an accident) not get cover??? Should an All Black earning over $1m get a govt subsidy for the same injury that the guy earning minimum wage also suffers?

So back to Kiwisaver, is the benefit of getting more people investing worth the money spent by the govt maing the subsidy to people who were already saving and would have saved regardless.

[Stranger_Danger]

Sometimes expressing things in an extreme way is the only way people see what is right in front of them.

The reality is, I honestly believe if my "extreme example" was implemented in New Zealand, you wouldn't be able to move due to all the body bags in the streets.

A sense of entitlement - especially when accompanied by selfishness and limited morals - is extremely dangerous.

People actually believe that it is morally ok to take someone elses money if it is sanctioned by the Government. They actually think that the role of a Government is to provide them with benefits in return for votes.

Let me go for a less extreme example.

If I stand on a street corner and offer you a $20 note in return for your vote, I will rightly be convicted of electoral fraud when you vote for me.

If I instead stand on a street corner and offer you $200 *every week* for your vote, and kindly describe the scheme as Working For Families, I will not be convicted of electoral fraud when you vote for me, and vote for me you will.

Buying a vote for a one off payment of $20 is illegal. Buying it for a weekly payment of $200 is not illegal.

Wanna have a crack at explaining that one to me?

[ENP]

d) There is an argument that someone else would take the deal and the other family would die anyway, therefore, why not take the money?

But back onto kiwisaver, I mean, you say I have a "take" mentality from the government.

If they are giving me "free" money, wouldn't YOU take it?

[ENP]

Buying a vote for a one off payment of $20 is illegal. Buying it for a weekly payment of $200 is not illegal.

Wanna have a crack at explaining that one to me?

$200 is a bigger number, I'd choose that one.

[Stranger_Danger]

d) There is an argument that someone else would take the deal and the other family would die anyway, therefore, why not take the money?

But back onto kiwisaver, I mean, you say I have a "take" mentality from the government.

If they are giving me "free" money, wouldn't YOU take it?

Of course I wouldn't take it!

It isn't "free" money, it is taken from someone else. In my case, it is almost certain the other person is less wealthy than I am. On what planet does it make sense to take other peoples money?

I worked 100 hour weeks to get my money, lived extremely frugally and took risks. That is how you create real wealth.

I'd much rather do that than receive other peoples wealth. Even more disgusting would be doing both simultaneously.

I know of wealthy people who have arranged their affairs to receive, for example, Working For Families. I rate these people as lower than criminals who at least have the balls to march into a bank with a gun or the work ethic to stand on a street corner selling drugs.

[ENP]

If I don't get my slice of the pie, someone else will. Plus, an extra $1000 odd comes in handy each year.

Thanks for paying for my retirement. :)

[Stranger_Danger]

I would rather bake my own pie and, even in this high tax country, eat the majority of it.

Ideally, I would rather a country where pie bakers get to eat more of their pie, whereas idle pie desirers like you have the empty stomachs you deserve.

However, I currently have reasons for staying in New Zealand, and isolate myself somewhat by investing in first world countries.

Eventually, well before the consequences of excess pie redistribution reach their logical conclusion, I will permanently leave.

By the time you reach retirement age and go to eat your ill gotten pie, it will not be there.

That is if you survive the revolution that will undoubtedly occur in New Zealand before you reach retirement age.

Enjoy the pie!

[ENP]

Oh and thanks for paying $5000 for my first home too. Maybe you should just leave now if you are so unhappy?

Gotta love that pie!

[Stranger_Danger]

You are a great example of the problem.

You're a beneficiary, yet proud of it?

You're like a pot bellied african standing around waiting for the soldiers to hand out bread, yet you manage to feel superior to the african, the soldier, and me! Wow, that is quite an achievement in self delusion.

[ENP]

You are a great example of the problem.

You're a beneficiary, yet proud of it?

You're like a pot bellied african standing around waiting for the soldiers to hand out bread, yet you manage to feel superior to the african, the soldier, and me! Wow, that is quite an achievement in self delusion.

You should be a childrens book writer. These stories and metaphors of life are just brilliant!

Back to the matter at hand... the government obviously didn't start and now continue to run kiwisaver if they didn't think it was for the best for the country. So why hate on me for it?

[Stranger_Danger]

Hitler also had strong feelings about what was best for his country. Does that make it ok?

The reason his own countrymen didn't snuff him out early on was because, deep down, a lot of the majority had a feeling of entitlement when it came to taking things from the minority.

Sounds familiar, ey?

[ENP]

What is your aim of this argument? Do you want to convince me to leave kiwisaver?