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Get your government contribution

by | 10 May, 2023 | General, Government Contributions, Investment, KiwiSaver

Each year, the government offers an incentive (called a government contribution) towards your KiwiSaver account. This contribution is a small step that could help you get closer to your KiwiSaver goals. So, how can you get the maximum government contribution for KiwiSaver?

 

What is the government contribution?

This is an annual contribution made by the New Zealand government to eligible KiwiSaver members. You are typically eligible for the government contribution if you:

  • are making contributions to your KiwiSaver account,
  •  live mainly in New Zealand,
  • are aged 18 or older; and
  • do not qualify for the retirement benefit.

If you would like more information about eligibility, please click here (this link will direct you to more information on the Inland Revenue website).

You could be eligible to receive up to a maximum of $521.43 per year of government contribution. You need to contribute at least $1,042.86 to your KiwiSaver account per year to receive this amount. You can still receive some government contribution even if you cannot contribute this amount. For every dollar you contribute, the government will contribute 50 cents up to a maximum of $521.43 per year. To illustrate what this may look like, see the table below.

 

Your personal contributions Money from government
Weekly Annual Annual
Over $20 Over $1,042.86 $521.43 max
$20 $1,042.86 $521.43 max
$15 $781.14 $390.57
$10 $521.43 $260.71
$5 $260.71 $130.35

 

How do you get the maximum government contribution?

If you are an employee, your contributions will come from your salary. If your contributions from your salary fall short of $1,042.86, then you can make a voluntary contribution towards your KiwiSaver account to receive the maximum government contribution.

If you are self-employed, you can make voluntary contributions towards your KiwiSaver account.

If you want to receive the maximum government contribution, it is essential to know that the government contribution is calculated on a per-year basis (which is measured from 1 July – 30 June). This means you must ensure you have contributed $1,042.86 by 30 June to receive $521.43 in government contributions.

Getting the maximum government contribution is a helpful savings incentive. If you made sure that you received the maximum government contribution each year, you could have received over $5,000 in your KiwiSaver account of free government contributions after ten years (not taking into account any investment returns or losses). The government contribution can help you get closer to reaching your retirement savings goals.

Helping you reach your investment goals

Helping you reach your investment goals

by | 10 May, 2023 | General, Investment, KiwiSaver

When joining KiwiSaver, one of the most important decisions you’ll need to make is choosing which fund to invest your KiwiSaver money in. Christian KiwiSaver Scheme has three Funds you can invest in, being Growth, Balanced, and Income. Each of our Funds has different risk profiles. However, did you know you can invest in up to all three of our Funds?

 

Understanding your investment goals

Before you rethink which of our Funds to invest in, it may be important to understand your investment goals. One reason to consider this is so that you know what your appetite for risk is. For example, depending on your situation, you may prefer to invest more in our Growth Fund, which contains investments the investments industry expects to have more frequent highs and lows but over time the Growth Fund is expected to provide higher returns. Contrastingly, you may prefer a Fund that the industry considers to carry lower risk than the Growth Fund and lower expected long-term returns. Funds with this profile would be the Balanced Fund and the Income Fund for our scheme.

It can be tricky figuring out your appetite for risk, but understanding this is useful to see if your KiwiSaver is working well for you. One tool to help you understand your appetite for risk is the ‘Investor Profiler’ tool on the Sorted website. You can find that here: https://sorted.org.nz/tools/investor-profiler

This tool asks you some simple questions about your approach to your investment. Based on your answers, the tool gives you an idea of what type of investor you are and other helpful information, such as what you could expect from your investment.

 

This image is a screenshot of example graphs from the results of the Sorted Investor Profiler. The example graphs shown are of $10,000 invested over 25 years with $50 each week. These are based on a range of assumptions and thousands of simulations. Your results will vary.

 

How can you allocate your KiwiSaver across our Funds?

Have you decided that you would like to allocate portions of your KiwiSaver money across our available Funds? Then all you need to do is fill out a Change of Investment form and email it to us. The form will contain simple instructions to follow. You will also see a table where you can specify the percentage of your KiwiSaver you would like in our Funds available.

 

This image is an example from our Change of Investment form which shows you the options of where you can allocate your KiwiSaver funds.

 

Before you do fill out this form, there are just a couple of things to keep in mind:

  • Make sure that there is at least 10% in any selected Fund.
  • Make sure the percentages you choose to invest in are whole numbers.

 

To illustrate what we mean by that, here are some examples:

  • You can choose 10% of your KiwiSaver in our Growth Fund and 90% in our Balanced Fund. 
  • You cannot choose to invest only 9% of your KiwiSaver in our Growth Fund and 91% in our Balanced Fund because you need to make sure you invest at least 10% in any selected fund.
  • You cannot choose to invest 10.5% of your KiwiSaver in our Growth Fund and 89.5% in our Balanced Fund because you need to make sure the percentage you choose is a whole number. In this case, you might choose either 10% in the Growth Fund and 90% in the Balanced Fund or 11% in the Growth Fund and 89% in the Balanced Fund.
  • These examples show a 10%/90% split. You can of course choose different splits for example 25%/75%, 50%/50% across two of our Funds, or 10%/20%/70%, 20%/30%/50% across three of our Funds etc.

 

If you want to change how your KiwiSaver money is allocated across our Funds, please fill in the form here.

Once you have completed the form, please email it to admin@christiankiwisaver.nz.

This is a service that we offer right from the application process to our KiwiSaver Scheme. If you have ever wanted to split your KiwiSaver money across some or all of our Funds, this option may be for you. 

We hope Christian KiwiSaver Scheme continues to help you reach your investment goals.

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Investment Outlook for 2023

by | 7 Feb, 2023 | Investment, KiwiSaver

The same main themes that applied in 2022 will again dominate in 2023. Those key themes revolve around the outlook for inflation, interest rates and growth. These are common every year but are particularly of concern at present.

Central banks have reversed their growth-enhancing policies. Interest rates rose significantly in 2022 and negatively impacted share prices. We believe interest rates will have a significant bearing on future returns. Will interest rates rise further this year? It is widely acknowledged that earlier interest rate rises have a delayed impact on the economy. Exactly how long the delay is and how deep the impact is varies depending on the area of the economy, e.g. mortgages, borrowing, business investment, consumer spending etc. There is still a lot of uncertainty about how labour shortages will affect the outcome. The fear is that labour shortages will result in wage growth, leading to higher inflation. These and other factors should determine how fast inflation numbers come down. Any geo-political developments could also surprise.

The World Bank has revised its 2023 economic forecasts. It was, in January 2023, expecting global economic growth of just 1.7% this year. If its predictions are accurate, that will put economic growth in 2023 at its third lowest level in the past three decades, behind 2009 (Global Financial Crisis) and 2020 (COVID-19).

There is little doubt, though, that whatever eventuates, the markets could fluctuate wildly at times. Rest assured, as we have mentioned previously, we are doing our best in these times of heightened uncertainty to look after our members’ interests. The portfolios remain diverse, and we focus on investments that we believe are more at the quality end of the spectrum.

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Investment Returns at 30 September 2022

by | 10 Nov, 2022 | Investment, KiwiSaver

Investment returns (before tax and fees) for the quarter ending 30 September 2022 are:

Fund 3 months 1 Year (p.a.) 3 years (p.a.) 5 years (p.a.) 10 years (p.a.)
Growth Fund 0.7% -2.4% 6.0% 7.7% 8.2%
Balanced Fund -0.0% -3.5% 3.7% 5.5% 6.6%
Income Fund -1.1% -5.4% -0.5% 1.1% 2.5%

* rounded to one decimal place.

 

Share markets were generally flat over the quarter. The fall in international share markets was offset by a fall in the New Zealand dollar. The New Zealand dollar fell as investors became concerned about the local growth outlook and that interest rates on offer may be better later overseas.

The downward movement in the New Zealand dollar could be considered a double edged sword. Exporters may be happier but imports may become dearer. Bond prices continued to fall (i.e. interest rates continued on their upward march this year) as major central banks around the world remained concerned with regards to the near-term inflationary outlook and conveyed their views as to the need for potentially higher short term interest rates. They hope to offset the rising cost of living that people are experiencing, by reducing demand for goods and services but without causing a recession or a large slowdown in the economy. The relentless rise in global interest rates continues to put downward pressure on share markets.

The recent return of large movements (up and down) in the share markets demonstrate their hyper-sensitivity to economic news and expectations. Political events added to the volatility (e.g. the proposed tax cuts and spending plans in the UK, subsequent U-turns in policy and the resignation of the UK Prime Minister).

The global economy is in unchartered territory with markets more focused on inflation and interest rates and less on company fundamentals. Outcomes in this respect are very hard to predict.

The International Monetary Fund (IMF) signalled a downgrade, for the fourth consecutive quarter, to its updated global growth forecasts in early October. The head of the IMF said that a third of the world’s economy would suffer a recession next year and many others would feel like they were in recession, against backdrop of shrinking real incomes and rising prices.

A lot of pessimism has been priced into markets this year, and there has been significant conjecture about where interest rates, inflation and the broader economy are heading.

Optimists point to leading indicators of inflation falling rapidly, setting up 2023 for a year of big declines in measured CPI (Consumer Price Index) inflation, while pessimists raise the idea that inflation will remain sticky, like it did in the 1970s, and it will take much higher interest rates to bring inflation under control.

Given the economic background which suggests a challenging time ahead for company earnings, uncertainty around company outlooks and consumer spending we remain cautiously invested, diversified and continue to hold higher than normal amounts in cash.

What is happening with KiwiSaver?

What is happening with KiwiSaver?

by | 10 Nov, 2022 | General, Investment, KiwiSaver

There has been a lot of movement in the market recently which may be worrying KiwiSaver scheme members around the country.

While KiwiSaver is a long-term retirement investment, you will have seen that annual performance is down. So, what do you need to know about what is happening with KiwiSaver?


What do you need to know?

KiwiSaver is an investment. This means that you are an investor and through this retirement scheme, your money is invested into the market. We at Christian KiwiSaver Scheme carefully manage your money in the effort to grow your investment and to minimise losses.

Depending on your situation, you may also be receiving additional contributions from your employer and/or the Government which you generally would not be receiving outside of a KiwiSaver scheme.

Previously, KiwiSaver schemes have had periods of strong positive returns. In recent years, particularly since the COVID pandemic, the market has not performed so well. The thinking in the market is that it is normal to have this sort of rebalancing period, particularly with these types of unprecedented events.

Most KiwiSaver schemes are in the same boat. Schemes are carefully watching the market and are all subject to its performance. KiwiSaver schemes are also tightly regulated by the Financial Markets Authority who enforce rules for the protection of consumers.


What can you do?

  • It is important to remember that KiwiSaver is a long-term investment. While KiwiSaver has experienced a turbulent time in this past year, you can see that our 5 years (p.a.) and 10 years (p.a.) investment returns are positive.
  • Last quarter we published an article to help you navigate through this potentially confusing time. Our message is very much the same, i.e. that you look at your investment goals and remember why you chose your particular fund rather than making any sudden decisions. You can view that article here.

While the future is always uncertain, the recent performance of the market can be seen as part of the investment experience where we will experience general ups and downs.

Anglican Financial Care (AFC), the fund manager of Christian KiwiSaver Scheme, is an organisation with long-standing experience. Established in 1972, AFC is celebrating 50 years of serving its members this year. We look forward to continuing to serve your KiwiSaver needs.

“I have told you these things, so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world.”

John 16:33 (NIV)

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Why are conservative funds losing money?

by | 10 Nov, 2022 | General, Investment, KiwiSaver

Some KiwiSaver investors who have their money in a conservative fund have been shocked by recent performance. Typically, these types of funds have been seen as “less risky”, but given their recent losses you too most likely want to know why these types of funds are losing money.

The performance of conservative funds are strongly linked with interest rates. If interest rates go up, as they have been recently, then the investments of the fund will generally go down in value (which leads to negative returns). However, if interest rates go down then the investments of the fund may go up in value (which leads to positive returns).


Why are interest rates going up?

Interest rates are increasing because our official cash rate (and many around the world) has been going up. The Reserve Bank of New Zealand (and other major central banks around the world) uses the official cash rate as a tool to set interest rates that try to fight inflation.

Their hope is that interest rate increases will lead to a slowdown in demand and therefore lower inflation. One example of this is that people may decide to spend less on products because of the higher interest rates. The idea is that there is a flow-on effect so that companies will begin to charge less for their products as they see people beginning to spend less.

The amount that we spend/purchase and the amount companies charge for their products are part of what affects whether interest rates go up or down. For instance, if demand does slow down enough then this might mean interest rates may not need to rise anymore.

Interest rates and inflation are not just influenced by what happens locally, but are also influenced by what happens around the world. In the recent past, we have had very low interest rates. Sudden big events, such as the war in Ukraine and COVID, may be part of the surprising inflation we are currently experiencing – and the big increase in interest rates we are experiencing now.

We at Christian KiwiSaver Scheme have certainly been doing our best to minimise these negative returns, however when the market has been performing this way it is sometimes difficult to do so.

Our investment style, with a focus on capital preservation and diversification, aims to reduce the losses that can prevail in these more uncertain periods.