Help with KiwiSaver decision making

Help with KiwiSaver decision making

KiwiSaver, the Government's new voluntary retirement savings scheme, has finally arrived. From now on, when most people start a new job, they'll be automatically enrolled in KiwiSaver and will need to decide whether to stay in or opt out. Almost everyone else under the age of 65 can choose to opt in at any time.

Tax credits and employer contributions added to KiwiSaver in this year's Budget may have made the scheme appear more attractive. The changes have also made it even more vital that you make an informed decision about the scheme's suitability for your own personal financial situation.

To help you make your decision, the Retirement Commission has highlighted some situations in which you should seriously consider joining KiwiSaver. These are where:

  • You can afford to contribute 4% of your pay.
  • Your employer will make a contribution to your KiwiSaver account now – not just from April 2008.
  • You plan to buy your first home any time after the next 3-5 years, and you expect to be eligible for the first home deposit subsidy.
  • You are over the age of 60, but not yet 65.
  • You know it’s time to start saving for your retirement.

If you can afford 4% of your pay and you don’t mind the funds being locked in until you’re 65, or older, then KiwiSaver could provide an easy and affordable way to save for your retirement. However, KiwiSaver won’t suit everyone. There are other savings options which may be more flexible and work better for you.

For more help visit the Retirement Commission's free, independent personal finance website sorted.org.nz, or seek some professional financial advice.

Sorted now includes an online KiwiSaver Decision Guide. This shows you how much you need to save for your retirement, how KiwiSaver can help you reach that amount, and how KiwiSaver can help you buy your first home.

The guide also helps you decide if you can afford to save 4% of your pay. If you'd like help with a budget try out Sorted's budget calculator or call 0508 BUDGET (0508 283 438) to speak with a budget adviser.

Glossary: Commission
Glossary: locked in
Being unable to remove your money from an investment or savings scheme without paying some kind of penalty. Usually an investment is locked in for a certain period - a number of years, months or until an event, like your retirement. For example if you make a six month fixed interest investment at the bank, your money is locked in for six months.
Glossary: adviser
A person who sells financial advice and/or products. They include financial advisers, insurance agents, planners, sharebrokers, mortgage brokers and bank managers or agents. They may be salaried, paid a commission or have an hourly rate.
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