There’s a lot of jargon used when it comes to KiwiSaver. It’s used by the media, the regulators and also people like us, your KiwiSaver provider. We try to use plain English but every now and again a bit of jargon is inevitable in our communications with you. We’re going to cover a few terms in each newsletter. Please tell us if there is something you’d like us to explain.
KiwiSaver provider means the organisation responsible for managing a KiwiSaver scheme, e.g Anglican Financial Care is the organisation responsible for managing the Christian KiwiSaver Scheme.
Regulator generally means the Government body responsible for overseeing the particular product, service, etc. For KiwiSaver schemes this means the Financial Markets Authority (also referred to as the FMA). They’re important as they keep an “eye” on the providers and others involved with your KiwiSaver scheme.
KiwiSaver scheme is the scheme you join. You can only belong to one KiwSaver scheme at a time. The Government sets out the rules for KiwiSaver schemes in an Act of Parliament, the KiwiSaver Act. A KiwiSaver scheme is run by a KiwiSaver scheme provider and a KiwiSaver provider can offer more than one KiwiSaver scheme. Typically each scheme has a number of funds into which you can invest. Anglican Financial Care has only one scheme, the Christian KiwiSaver Scheme and within it offer 3 funds – the Growth, Balanced and Income Funds.
Restricted KiwiSaver scheme is a KiwiSaver scheme that is not open to the general public, and has restrictions on who can become a member, i.e. the Christian KiwiSaver Scheme is not open to everyone.
Licensed Independent Trustee. Each restricted KiwiSaver scheme must have a Licensed Independent Trustee. The FMA oversees who can be a Licensed Independent Trustee. Brendan O’Donovan is the current Licensed Independent Trustee member of Anglican Financial Care’s Board.
There is a KiwiSaver Glossary on the website under Documents/Guides & Policies that explains most of the KiwiSaver related jargon.
Many of us have grown up with the stories of Winnie the Pooh. If we didn’t, some of us may have seen the recent movie called ‘Christopher Robin’ which re-introduces Winnie the Pooh to a wider audience.
Many of us would be surprised to know that Winnie the Pooh owned a gun in 100 Acre Wood. We would be puzzled as to why they would own guns in that wood as they don’t hunt, and they don’t have target practice. Yet, in one account of Winnie the Pooh’s exploits, there was a knock on the door of his tree. Winnie answered the door … with a gun in his hands.
When A. A. Milne started writing about Winnie the Pooh in 1926, it was a different time with a different attitude toward guns. Like climate change, guns and munitions have increasingly become something that people are concerned about.
After the attacks on the Al-Noor Mosque and the Linwood Islamic Centre in Christchurch earlier this year there has been a growing concern about whether New Zealand KiwiSaver providers have invested funds in arms or munitions. There are some providers that have invested in this industry. But the Christian KiwiSaver Scheme is not one of those; it is among a small number of KiwiSaver providers that provide ethical investments and excludes munitions.
In a recent Colmar Brunton survey, over 70 percent of respondents answered that it was important for them that their KiwiSaver money was not invested in weapons. The survey found that a lot of members didn’t know if their funds were invested in munitions at all.
In New Zealand, there are over 2.7 million people signed up with KiwiSaver. The New Zealand Herald quoted a 2018 Consumer survey finding that around seven out of 10 people wanted their money invested ethically. But only around 8,600 people had signed up to specifically targeted ethical investment funds. While some people may hesitate in investing in ethical funds as they may feel these funds give lower returns, some of the best companies in the current market are those that are the most sustainable companies – they look after the environment and their employees. So thinking seems to be changing among investors.
Remember you can log into your account and check which fund your money is invested in. Or, if you prefer, give us a call on (0508) 738 473.
Winnie the Pooh image from www.disneyclips.com
From 1 July 2019, the age 65 restriction on joining was removed and this group of New Zealanders (and permanent residents) can now join and invest in KiwiSaver.
KiwiSaver is now an investment option for New Zealanders who are 65 or older. So why join KiwiSaver at this stage of life? Well, it provides an opportunity invest into a professionally managed savings product without your money being ‘locked away’ (as is the situation for those aged under 65 except in certain circumstances). The other thing is that life expectancy is increasing meaning your savings need to work harder to last over a longer period.
Christian KiwiSaver Scheme offers members a choice of three investment funds – Growth, Balanced and Income. The Income Fund has the lowest level of risk attached to it.
Christian KiwiSaver Scheme offers its members a KiwiSaver scheme that is invested under universally accepted Christian values. Long before it became trendy we were investing our funds in an ethical and responsible way. As Christians we like to make investment choices that resonate with what we believe.
While Christian KiwiSaver Scheme does not offer its members a “pension” we can pay your savings to you as a regular income each month or quarter. The frequency is your choice. You can also withdrawal large amounts (or your whole balance) at any time. We do not currently charge a transaction fee for regular payments or other payments.
The Government has recently proposed some changes to KiwiSaver for next year.
More contribution rates for employees.
At the moment you can contribute at 3%, 4% or 8% of your pay.
From 1 April 2019, it’s intended that you’ll also be able to contribute at 6% and 10% of your pay.
This gets the big tick from us as it gives you more flexibility over the amount you save.
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’ changes its name to ‘savings suspension’.
From 1 April 2019, it’s intended that the maximum period for ‘savings suspensions’ reduces from 5 years to 1 year.
If you want to continue with a savings suspension then you’ll need to apply to Inland Revenue each year to renew it.
These two changes also get the big tick from us. A ‘holiday’ generally means good times, stopping your retirement savings might not be the best thing for you in the long run. During this time members also miss out on the government’s contributions of up to $1,042.86 each year (that’s potentially $5,214.30 over 5 years).
Removing the age 65 restriction on joining
At the moment people over 65 cannot join KiwiSaver. From 1 July 2019, it’s intended that the age 65 restriction on joining is removed and 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 gets another big tick from us. KiwiSaver will be open to all New Zealanders and provide a convenient and cost-effective investment option to just holding your savings in a bank account or on fixed deposit.
From our perspective, it’ll also allow New Zealanders over 65 to join our Christian KiwiSaver Scheme and have access to investment funds invested under an ethical investment policy.
Every year the Government makes contributions to the accounts of eligible KiwiSaver members, up to $521.43 each. These contributions are usually credited to members’ accounts in early July. In 2018 the Government paid $753 million in contributions to KiwiSaver members. Did you get your share of that? Make sure you receive your $521.43 this year by contributing enough before 30 June 2019.
How much can I get?
The Government pays 50c for every $1 you pay in, but there is a limit. The Government’s money is credited to your KiwiSaver account. To get the maximum amount of $521.43 from the Government, you need to pay at least $1,042.86 each year. This equates to $20 a week. Here are some examples of how this works:
If you are an employee and earn $34,762 p.a. or more, and contribute the minimum 3% of your pay to KiwiSaver then you’ll qualify for the maximum without having to do anything else.
If you want to receive the maximum amount for the year ending 30 June 2019 year then you can make a top-up contribution if you wish to do so. But this needs to be done before the end of June 2019.
Who can get this free Government money?
The Government will make an annual payment into your KiwiSaver account as long as you:
- have made personal contributions to your KiwiSaver account during the year;
- are aged between 18 and 65*; and
- were resident mainly in New Zealand.
*Eligibility for the Government’s money can extend beyond 65 if you have not been in KiwiSaver for 5 years; in which case it ceases after 5 years membership.
You can make personal contributions to your KiwiSaver account by deductions from your pay, or regular payments, or lump sum payments.
Not sure about your personal situation
You are welcome to contact us to check on your situation, or you can log on to your member section of the Christian KiwiSaver Scheme website to access your personal information.
Being in the investment fund that best suits you is very important. Not knowing can cost you money if you make decisions that are a reaction to investment markets (e.g. a negative return) rather than a change in your personal circumstances or your feelings about risk.
Changes in the investment markets don’t change your investor type, changes in your personal circumstances are what influences your investor type.
You can also have more than one investor type (this can also be called your ‘investor profile’) depending on your personal investment goals. Confused? The Sorted website has some good information on it to explain how you can work this out and decide which type of Fund may best suit you. You can sign up on the Sorted site and save your personalised findings.
Sorted also has a personality quiz where you can find out if you’re a money maestro, practical domestic, authentic dreamer, money mechanic or one of the 12 other types.
Keep in mind that your investor type is not a description of you (people who are adrenaline junkies can be conservative where their money is concerned!). Your investor type is a measure of your financial circumstances, your personality, the timeframe you have to invest, and most importantly, how much risk you feel comfortable taking or can afford to take. The higher the returns you chase, the more you need to accept risk and run the chance that your investments will fluctuate in value or lose value.
Sorted has suggested the following attributes for various investor types.
We offer three distinct investment funds within the Christian KiwiSaver Scheme – the Income Fund, Balanced Fund and Growth Fund. This gives our members access to a good range of investment options, according to their particular circumstances. Members can invest in more than one of these Funds. This means each member can fashion an investment selection that suits the type of investor they are, and it can be changed at any time in the future.
Changes in the investment markets don’t change your investor type, changes in your personal circumstance are what influences your investor profile/type.