News | Features
14 Aug 2022 18:41
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • Crime.co.nz
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Business > Features

    Kiwisaver Neither Guaranteed Nor Ghastly

    Recent news suggests New Zealanders are poles apart on KiwiSaver. Some think the scheme is safer than it is. Others are leaping to ridiculous conclusions about how unsafe it is.


    The "too-safers" were revealed in a UMR Research survey that found 48 per cent of KiwiSaver members think it has a government guarantee – which is not true. A further 37 per cent aren’t sure, leaving a mere 15 per cent who know there is no guarantee.

    What’s more, a full 62 per cent of those who said they know lots or a fair bit about KiwiSaver got this wrong, compared with 37 per cent of those who said they know "not that much" or "hardly anything". The cliché "a little knowledge is a dangerous thing" is not a cliché for nothing.

    Meanwhile, others are blowing the significance of revelations about one KiwiSaver provider's shenanigans out of all proportion, pronouncing all of KiwiSaver as a shark-infested rip-off.

    The truth is that the scheme carries some risk at two levels:

    • The provider. It seems fairly unlikely a provider would get into trouble in a way that would seriously hurt its KiwiSaver members. If a provider wasn't doing well, it could sell or close down its KiwiSaver scheme, but that shouldn't affect members, who are not investing in the provider's business.

    Instead, they are investing in shares, property, bonds, bank deposits, government stock and so on – issued by a wide range of businesses.

    It's the job of each scheme's trustee to check that those investments are in fact made.

    If your provider wants out, your investment will be transferred to another provider and its value shouldn't change. If you don't like the new provider, you can always move, simply by contacting the provider you prefer. They will do the switching for you.

    Of course it's always possible that a provider will commit fraud or deceive those who monitor it – despite government plans to make this less likely in the next couple of years. That's why you should choose a company you trust. Even then you can't be certain, but nor can you be certain of your bank or insurance company.

    If you're not prepared to take a bit of risk, stay out of KiwiSaver.

    But you'll pay a price for your reluctance, missing out on the government kick-start and tax credits as well as employer contributions. Some of your tax dollars will go into other people's KiwiSaver accounts.

    • The investments your fund makes. Conservative funds are low-risk, with little likelihood the value of your investment will ever fall much. Then come balanced funds, with a combination of higher and lower risk investments, and finally the riskier funds – which mainly invest in shares and sometimes some commercial property.

    While investments in riskier funds are likely to grow more over the long haul, your balance will fall often – and sometimes a long way.

    If you can't stomach that, or you expect to take out your money within the next five to eight years, move to a lower-risk fund.

    In most cases your provider can make that move for you. If your provider doesn't have a lower-risk fund, move to a provider that does.

    So where are we? KiwiSaver has no guarantees. It's possible – but unlikely – that you could lose from a provider's bad behaviour, so move to a provider you feel comfortable with. And if you don't like a rocky ride, move to a low-risk fund.

    But don't stay out of KiwiSaver, or stop contributing. The incentives make it such a good deal that it's worth taking a bit of risk to be onboard.

    © 2022 Mary Holm, NZCity

     Other Features News
     10 Sep: Spring clean your finances
     13 Aug: Plan ahead to give yourself a debt-free Christmas!
     10 Jul: Wise up to clear credit card debt
     07 May: Ways to prepare for the unexpected
     30 Mar: Time for a financial progress check
     10 Feb: Studying up on NZ Super
     10 Jan: Managing the back-to-school bills
     Top Stories

    RUGBY RUGBY
    New Zealand Rugby boss Mark Robinson is refusing to shed any light on the future of coach Ian Foster More...


    BUSINESS BUSINESS
    New Zealand Rugby boss Mark Robinson is refusing to shed any light on the future of coach Ian Foster More...



     Today's News

    Environment:
    French climate activists fill golf course holes with cement, protesting against water ban exemption amid drought 18:09

    Business:
    New Zealand Rugby boss Mark Robinson is refusing to shed any light on the future of coach Ian Foster 18:09

    Rugby:
    North Harbour lead Manawatu in the second half of their NPC outing in Auckland 17:29

    Cricket:
    The Black Caps look unshakeable heading into their final dead rubber twenty20 against the West Indies tomorrow morning 17:09

    Law and Order:
    Auckland have survived against a valiant Southland outfit for a 24-23 NPC victory in Invercargill 16:49

    Rugby:
    Former All Black Mike Brewer believes coach Ian Foster will be axed in spite his team's stunning 35-23 win over South Africa at Ellis Park 16:39

    Politics:
    More than $10 million in assistance claims denied as Australians caught trying to rort flood support 16:09

    Rugby League:
    Cameron Ciraldo has inked a five year deal to take over as Canterbury Bulldogs head coach in the NRL 15:29

    Health & Safety:
    New Zealand has 2,618 community cases today - the lowest figures since February 14:49

    Law and Order:
    Black Caps paceman Matt Henry's been ruled out of the remainder of the West Indies tour due to a rub injury 14:49


     News Search






    Power Search


    © 2022 New Zealand City Ltd