Get your KiwiSaver decision Sorted

One of the things on the ‘to do’ list of many New Zealand workers this year will be deciding whether or not to join KiwiSaver.

You’ve probably heard about the government incentives like a $1,000 kick start to your savings, and the up-to $1040 annual ‘tax credits’. But there are also the employer contributions to consider.

Every time you’re paid, either 4% or 8% (you select the amount) of your before-tax pay will be deducted from your take-home pay and sent to your KiwiSaver account.

From April this year, your employer has to match your contributions to KiwiSaver starting with a minimum of 1% of your pay, and increasing by 1% each year until it reaches 4% in April 2011. (Your employer may also contribute more than these amounts.)

Or if your employer agrees to match it, you can start with a 2% contribution from your pay, increasing that over time, until you and your employer are both contributing 4%.

If you can afford it, 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.  Keep in mind that KiwiSaver won’t suit everyone. There are other savings options which may be more flexible and work better for you.

If you do decide to join KiwiSaver, another decision you will need to make is where your money is invested.

If you prefer, you can choose the provider your KiwiSaver funds are sent to and the type of investment option for your savings. If you would rather not choose, your employer may have a preferred provider they’ll send the money to, or the government will select one for you.

To help New Zealanders with the complicated task of working out which KiwiSaver fund is most suitable for them, a new KiwiSaver fees calculator has been added to Sorted. This provides an independent estimate of KiwiSaver fees to help you make a more informed decision on which KiwiSaver provider and fund to choose.

Note that it is important to not look at estimated fees in isolation when choosing a KiwiSaver provider. The level of risk (and associated return), service level and communication offered by the fund provider should also be considered.

The new KiwiSaver fees calculator is one of a range of KiwiSaver decision-making tools on sorted.org.nz, your independent money guide.

Published 5 February 2008