July 2018 - Christian Kiwisaver Scheme
Changes to KiwiSaver – what do they mean for you?

Changes to KiwiSaver – what do they mean for you?

The Government has made some changes to KiwiSaver that include:

  • Introducing more contribution rate options for employees (from 1 April 2019)
  • Reducing the maximum period for ‘contribution holidays’ (from 1 April 2019)
  • Allowing people over 65 to join (from 1 July 2019).
More contribution rates for employees.

From 1 April 2019, it’s intended that you’ll also be able to contribute at 3%, 4%, 6%, 8% and 10% of your pay. 6% and 10% rates are the new options. Perhaps review your level of contributions when you receive a pay increase, it’s a great time to take the opportunity to save a little more.

Savings suspension timeframe reduces

‘Contribution holiday’ is now called ‘savings suspension’ and the maximum period for savings suspensions reduces from 5 years to 1 year. You need to apply directly to Inland Revenue each year to renew a savings suspension.

If you’re not making personal contributions to your KiwiSaver then you may also be missing out on the government’s contributions of up to $521.43 each year. That can add up to a lot over time, e.g. potentially $5,214.30 over 5 years. See the above article to check out how to qualify for the ‘free’ Government money.

Removing the age 65 restriction on joining

From 1 July 2019, the age 65 restriction on joining is removed and this group of New Zealanders (and permanent residents) will be able to join a KiwiSaver. The 5-year lock-in period on joining is also removed. There is no change to the age at which you qualify to withdraw your KiwiSaver savings, this remains age 65.

This provides a convenient and cost-effective investment option to just holding all your savings in a bank account or on fixed deposit.

Tell your friends and family about Christian KiwiSaver Scheme. They may be interested in joining and investing in a KiwiSaver scheme that is invested under an ethical investment policy and Christian values

Getting back into a savings habit is good for you

Getting back into a savings habit is good for you

In a recent NZ Herald article Retirement Commissioner Diane Maxwell said “I was terrible with money, I didn’t think I was going to live to grow old.” She went on to say “I look back and I could weep over all the money I’ve wasted.

How many times have you said something similar to yourself? Or are thinking why bother saving for retirement?

But it can be hard to restart saving when there are so many other demands on your income. Here are a few reasons why getting back into a savings habit is good for you.

Pay yourself first

“Pay yourself first” is one of the pillars of personal finance and considered a golden rule by many financial planners. The basic idea is simple. As soon as you get paid, put some of your pay into your savings account(s). You do this before you pay your bills or buy groceries.

Paying yourself an amount that works for your budget is one of the easiest ways to get saving. Saving small amounts can make a big difference to getting ahead. It also has good physiological benefits. When you prioritise savings, you’re telling yourself your future is the most important thing to you, not that takeaway coffee. While money cannot buy happiness, it can provide peace of mind. By moving savings to the front of the queue, you’re able to set money aside before you rationalise ways to spend it.

By making your savings automatic, chances are you won’t miss the money as it grows in its own separate accounts. You might put some of these savings into KiwiSaver for the long-term and some into another savings account for shorter term goals and unexpected financial bumps.

It’s never too late to start saving.

Sources: www.investopedia.com and sorted.org.nz/guides/paying-ourselves-first

What money are you missing out on by not contributing to your KiwiSaver account?
  1. The annual Government contribution,
  2. If you’re an employee, your employer’s contributions, and
  3. Lost investment earnings.

If you would struggle to meet your financial commitments if you restarted regular contributions from you pay to KiwiSaver, then consider making regular small payments throughout the year to be at least be eligible for the government’s annual contribution. You can still make these contributions direct to your KiwiSaver scheme provider while you are on a contribution holiday. You’ll need to contribute $1,042.86 (that’s about $20 a week) to qualify for the maximum government contribution of $521.23. You can also contribute less than this and still qualify for a lower government contribution. See more about this on our website.

Financial wellbeing

Most New Zealanders are confident in their ability to manage money but about 25% have no cash savings, according to recent ANZ research exploring the financial knowledge, attitudes and behaviours of adults in Australia and New Zealand.

Starting to save, even a small amount, is one of the most important factors for people feeling higher financial wellbeing.

This research grouped the surveyed New Zealanders in the following four groups:

What is meant by ‘financial wellbeing’? Commonly agreed components of financial wellbeing are:

  • Being able to meet financial commitments
  • Having resources to enjoy life
  • Having the ability to cope with unexpected financial shocks, and
  • To feel in control and satisfied with your current situation while having positive views and plans for your financial future.

Financial wellbeing will be different for everyone.

The research also showed financial wellbeing was not based solely on income or wealth but feelings and expectations about a current and future financial situation. People could have relatively high levels of financial wellbeing without necessarily having a high income, and vice-versa.

What is consistently found in a variety of research on financial wellbeing is that the most important behaviours were active saving, not borrowing for everyday expenses and restrained spending.

People are generally fitter and healthier in their 60’s and 70’s than the previous generation and more are keen to keep working longer. While many were still working because of the value and satisfaction it gave them, nearly a third of Kiwis still working after 65 say they have to do so to pay the bills.

The government paid pension, New Zealand Superannuation, is $400.87 per week after tax for a single person living alone ($20,845.24 pa). There are different NZ Superannuation rates for your different living arrangement, go to the Ministry of Social Developments website for more information.

It’s never too late to start saving.

Sources:

  1. ANZ: Financial Wellbeing: A Survey of Adults in New Zealand April 2018
  2. BNZ Financial Futures research: bnz.co.nz/about-us/media/2018/the-unexpected-secret-to-a-happy-retirement
KiwiSaver gives the self-employed great options

KiwiSaver gives the self-employed great options

If you’re self-employed then KiwiSaver provides a handy and cost-effective option to save for retirement. If you know someone who is self-employed then tell them, your friends and your family about Christian KiwiSaver Scheme, a KiwiSaver scheme for Christians that reflects Christian values and is founded on ethical and responsible investment principles. Send them a link to this article.

You don’t have to be in paid employment to join, it’s open to:

  • workers who are self-employed
  • those not in paid employment
  • students
  • children.

Self-employed people have great options:

  • They can choose the amount they save in KiwiSaver
  • They can make contributions on a regular basis or lump sum payments every so often
  • They choose their KiwiSaver scheme (pick ours!)
  • They are entitled to the government’s annual contribution of up to $1,042.86
  • They are entitled to all of the other KiwiSaver benefits.

It’s never too late or too early to start but the earlier saving starts the better off the saver is likely to be. Saving a little over a long time has proven to be a really good option.

Investment returns to 30 June 2018

Investment returns to 30 June 2018

Another positive quarter ensured that solid returns were reported for each of the funds in the quarter ended 30 June 2018. The benefits of diversification were evident with lower returns on bonds being more than offset by exceptional returns for shares. Christian KiwiSaver Scheme also invests in unique asset classes like forestry, mortgage loans to Christians and select private equity investments which over the long run have further diversified and enhanced returns.

Whilst many uncertainties exist, the mood remains upbeat – particularly in the US where corporate profits are strong – and positive sentiment may continue for a time yet despite the reported potential for trade wars, higher inflation and reduced growth. Other significant influences in the quarter included ongoing Brexit discussions, political developments (e.g. the Italian election), and denuclearisation dialogues.  Given the many uncertainties and current elevated asset price levels we continue to invest cautiously with a focus on quality assets, i.e. those that have a greater chance for preserving capital whilst also providing a fair return on that capital.

Investment returns at 30 June 2018, before fees and tax:

3 Months 1 Year (p.a.) 3 years (p.a.) 5 years (p.a.)
Income Fund 0.3% 3.2% 4.1% 4.6%
Balanced Fund 3.6% 9.0% 7.8% 8.5%
Growth Fund 5.4% 12.4% 9.9% 10.6%