The pros and cons of KiwiSaver
The pros and cons of KiwiSaver
You may have read a news story recently about people selling KiwiSaver door-to-door. Whether you’re faced with a salesperson on your doorstep or a KiwiSaver form when you start a new job, it’s important you take the time to make a decision that’s right for you.
These reasons for and against should help you come to a conclusion:
5 reasons not to join KiwiSaver
- You can’t afford to contribute 2% of your pay.
- You’d rather put that money into paying off high interest debt (e.g. credit card, hire purchase) before joining KiwiSaver.
- You don’t want your savings locked away until you’re eligible for NZ Super – currently 65 years of age.
- You’re already a member of (or you’re able to join) a superannuation scheme that your employer contributes to, that is better for you.
- You already have a plan in place for your retirement income that is at least as good or better.
8 reasons to join KiwiSaver
- You like the idea of a $1,000 kick-start from the government.
- You like the idea of up to $1,042.86 a year in “tax credits” to increase your savings.
- You like the fact that your employer will contribute to your KiwiSaver account (at a minimum of 2% of your before-tax pay).
- You can put your contributions, and your employer’s contributions, towards a first home deposit and might be eligible for a first home deposit subsidy after three years.
- You like the idea of savings you can’t touch until you’re eligible for NZ Super – currently 65 years of age. (Or after 5 years’ membership, for those 60-64 years of age when joining.)
- You may not be a natural saver so need something that’s easy to manage.
- The fact that it comes out of your pay before you see it is a plus.
- You can put your contributions on hold after 12 months if you hit a rough patch or if you change your mind.
These pros and cons are based on the checklist in our booklet KiwiSaver – Is it right for you? For more information about the scheme, visit our KiwiSaver section or Inland Revenue’s comprehensive KiwiSaver website.
If you have already made your KiwiSaver decision, was it for any of the reasons above? Or did something else tip the balance for you?
User comments saving account vs kiwisaver
I set up a serious savers account with my bank at the same time as i signed up with kiwi saver and though my savings looks healthy and im reaching goals with it the kiwisaver is making me money and looks healthier than my savings account...so yes it is worth being with the kiwisaver its working for me but i do keep an eye on it and I know in a few years that it can help me to secure my first house along with my savings
Posted at 11:18 pm on April 16, 2010 I joined my kids up
I joined up the kids an now realise that because they are not putting in money by the time they start to earn and pay into kiwisaver at 18 I believe all of their $1000 kickstart will be used up in fees. I should have waited.
Posted at 10:03 pm on March 27, 2010 An opportunity too good to be true
Govt contributions are all good and well...but take a look at the actual results of the KS funds and the fees/taxes involved. How about returns on your investiments of -21% (without fees & taxes)! Yes there are a couple of +ve growth funds, but by and large the returns are -ve. There are better ways to waste your money if you wanted too.
Posted at 11:02 am on October 12, 2009 Reasons to join KiwiSaver
I joined because I don't think any form of saving can beat a 300% or more return - what I put in gets matched by the government AND my employer, plus whatever investment returns I get. Include my kickstart, and after a year I have 4 times as much as I've personally contributed. Why miss out on an opportunity this good?
Posted at 12:45 pm on September 24, 2009 
