Rock Ape

Hi,
My prospective employer is offering the opportunity to join the Kiwisaver scheme. I have looked at their website on the face of it, it looks pretty good. Does anyone have any personal experience of it and any comments about how it performs?

EOI selected on 24th April and now waiting for ITA

Thanks

Rock Ape

No takers?

Dezza

Sorry can't help cos I'm still in UK so no personal experience. If employer matches your contribution then has to be worth considering?

Rock Ape

Thanks Dezza - I think it looks quite good but useful to get feedback.

newkiwi

I think the general consensus is that its better to opt in as soon as possible.

Rock Ape

Thanks very much for the input. I'm going out in about 4 weeks so it is useful to have some advanced knowledge.

RobClubley

You get enrolled automatically when you start a new job and you have 12 weeks to opt out if you like.
You get s $1000 starting bonus and tax relief up to about $1200 a year. You pay either 4% or 8% of your salary (standard is 4%) Also the employer pays 1%, going up to 2% next year, 3% the following and finally 4% in 2008
If you decide to leave NZ you can get your money back out but you lose the tax relief bits and signing bonus.

The only disadvantage I can see is that it's locked to the retirement age - which is 65 at the moment - so no early retirement. And if the decide to change the retirement age in future to 70, for example, your plan changes too.

Maz

If you don't have PR, you can't join it. Just so you know.

Am watching the morning news on TV One, and they just had a news piece that many Kiwis don't trust the scheme enough yet. My take is that it's still so new.

RobClubley

True but compared to a kiwi pension the money builds up a little bit faster.

cappuccino

There are management fees which could effectively wipe out some advantage and no guarantees of getting 100% of investment back. Lots of people are saying its better to invest in bank savings schemes (some offering 9%) to guarantee full return.

Also, see my thread on unscrupulous employers taking their contribution directly from the employees salary!

Maz

Heard a little snippet today (we only just got PR so I've really not researched KiwiSaver much before now, no point) at work - the government taxes you on the interest earned. Nice.

Yotty

Yes Maz the profits of the fund are taxed. http://www.kiwisaver.govt.nz/kiwisaver-schemes/ bit of a bummer ..

Rock Ape

Yes, I hear you but most pensions are taxed (UK state pension for one) so nothing earth-shattering there. Having done the on-line calculation, the gross return at 65 looks pretty healthy.

Yotty

UK pensions aren't normally taxed on money you put in, or on the growth of the fund. Obviously the income is taxed when you choose to draw it.

RobClubley

But in NZ everything's taxed