Umamiblog

major problem 1
you are locked in FOREVER, you can’t stop unless you get permission, even then there is a limit and you have to keep re applying.

major problem 2
you need to do a lot of research on who you choose are your provider, remember you money is not secure, if you provider goes down the toilet, so does all your money. nothing you invest is government guaranteed, so do you homework on your provider and your plan.

major problem 3.
if you sign up with kiwsaver, expect to say good bye to a payrise next year. plently of companies will not be able to afford to give you a payrise and contribute to your kiwisaver.

major problem 4.
unlike personal super schemes, you can’t access your money if you want to. if something bad happens and you need money, you can’t withdraw from your kiwsaver. You can for buying a house, but not if you loose both legs in a freak tornado and could do with some money to make life easier

BUT
saving is good
starting saving now for the future is good, but kiwisaver may not be the best choice for looking after your future, kiwisaver is putting all your eggs in one basket

Sue, thank you for your extremely awesome comment!

Sue, thought provoking comments.

Agree with you absolutely on the first 2 points. The other two well…

If your employer is not going to give you a payrise at all because they have to contribute 1% next year, you need a better employer, or maybe to be a better employee, I’d expect more than a 1% payrise sure I wouldn’t mind taking a reduced rise i.e. 4% as opposed to 5%, also that extra 1% (to 4%) is TAX FREE!!!! W00T!! Both the amount you and your employer contribute are not taxed.

Problem 4 is not quite right, you can access that money in times of financial hardship, sure it’s harder to get at that money, but let’s face it the general public are stupid and can’t be trusted to make good savings choices….

Oh and as for me, I’m in contributing at 4% because I like to split my investments and I’ll be selecting one of the growth funds at first glance ING looks decent but more investigation is required.

Employers will get tax cuts to help them to cope with the implementation of kiwi saver, so in theorie, there shouldn’t be any impact on wage increases for at least two years…

Kiwi saver is really good for people who are very young (and about to purchase their first home, although it mustn’t cost more than $400,000 in Auckland and $300,000 everywhere else in NZ) or either almost old enough to retire or have planned ahead every little step for the rest of their working life. As soon as you’re not sure where in the world you’ll live in the upcoming decades, it doesn’t make much sense to put money into a savings account that you can’t access for a long time. Also, if you currently have a mortgage to pay, it’s better to get rid of the high interest debts first. http://www.sorted.org.nz seems to have a lot of information and an online calculator to find out if kiwi saver is good for you or not.

I’ve elected not to join KiwiSaver only because as the business owner it does not provide very much in the way of additional benefits to me.

Our accountants also provided a solid breakdown of the benefits, costs etc for an employee and for the employer in choosing to go with KiwiSaver. Effectively they believed it was advantageous for an employee but not for the business owner.

Sue, if you’re paid well already surely losing one pay increase to your retirement savings is not actually much of a concern? It’s money you would likely spend on luxury items and this scheme therefore resolves the issue of people not saving enough.

The concern I have is that this plan does not help the people that need it most – the low pay employees who are likely the most near the poverty line. They are not in a position to sacrifice 4% of their hourly wage to aid in retirement. This begs the question then of why we have the scheme in the first place – those than can already afford to save for their retirement will get added incentives, the wealthy don’t care because they could afford to retire right now and the low income folks are, again, not actually making any headway. I’m sure this won’t stop politicians grandstanding about how they have made the futures of the countries poorest much better.

– JD

I signed up to Kiwisaver at 4%. Although the money is locked in, the government contributions are too good to pass up.

After a year I’ll be diverting half to my mortgage. From the sounds of things I should get all the benefits while only contributing 2%.