[suebeenz]

I've been too busy (lazy?) to look into Kiwisaver to fully understand the ins and outs. I've had passing thoughts about buying a short book about it, but my pursuits ended there.

Sounds like free money if you're employed here in NZ, but what about for those of us that are self-employed? Or working for an overseas company? Are you going to sign up?

[andrewandjane]

if u have kids its worth signing them up. as its free money and for a 5 yr old theyl have 15-20k by the time theyre 18 just on the money the govt put in initially.......

went to a seminar at work on it and am still debating it. depends on clarification of home buyer scheme and income levels..as its not all as it seems...

[jubjub]

Andrew/Jane, who did you open your kids kiwisaver with? (if you have already signed them up)

[Bubbles]

depends on clarification .................................as its not all as it seems...

At the moment, for me its still a BIG 'NO' due to the above.
Theres still quite abit they have to sort out it seems !!!!!!!!!!!!!!

[constablechuck]

I've studied the Kiwisaver scheme and I think it's great.

[KD17]

I think its just a way for the goverment to make money by luring the Kiwi in with what appears to be "free money". There are many caveats which need investigating further, and from my research no-one really seems to know the ins and outs of it as different financial advisers give different levels of opinion on it. I can't say advice because all I've had are opinions.

I'm staying well clear of it until at least the next election and then see what changes they make to it.

Debby & Keith

[suebeenz]

Article in Herald today is what reminded me about Kiwisaver.

From http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10452352

Dr Morgan, of Gareth Morgan KiwiSaver, said in a statement that too many providers continue the old savings and insurance trick of identifying only fees and telling savers in small print that expenses will be "charged to the scheme".
.....
Dr Morgan, who is against the KiwiSaver concept despite being a provider ....
...
"So, the public have no idea how far most schemes can increase their fees."

Mr Gawith said an issue that would come up later would be fund providers charging members the same percentage fees whether the investor had a large sum or a small one. It virtually cost the same to service both but the one with the large sum invested would pay, say, $1000 a year and the small investor $100.

"I think it's going to be a future issue."

[katandbob]

Most independant financial advisers have told us we would be better off putting the 4% or 8% to paying the mortgage off, if you work part time, then the £1,000 for free is better than say your collegue who works 40 hrs and gets the same. Or if your nearing retirement age, or you have not bought a house yet.

But I don't like that they can't guarantee that you will not loose your money...I would rather pay off my mortgage quicker as the figures show that what I would save in interest is more than what I would save with Kiwisaver.

Plus I can safely put my money in a Bank account and earn a reasonable amount of interest with the guarantee of getting a profit and access to my money in an emergancy.

I am NOT a money expert - so check out this website to help you decide
http://www.sorted.org.nz/calculators/kiwisaver

Kat

[diforsyth]

But I don't like that they can't guarantee that you will not loose your money


This is not entirely true. When signing up to KiwiSaver everyone gets 3 months to decide: -
a) which company/provider they would like to use to invest their money
b) which type of investment plan offered by that company/provider

If after signing up, you don't make a choice within 3 months, the IRD will assign you to one of the six default providers, who will in turn place you into their most risk averse investment plan (most likely a bank account earning a standard interest rate).

What Kat is refering to is the scenario when people want the greatest return on their investment and they choose plans with greater risks associated with them i.e. investment in stock markets. This is the same as investment outside of KiwiSaver - if you want to go for the big money, you must also be prepared to lose money.

My own 2 cents worth (bearing in mind I'm not a Financial Advisor) - if you can afford to save at least the minimum (and this may increase in the future), and guarantee you'll still be in NZ when you retire and know you'll never need to call on those savings prior to retirement age, then KiwiSaver is absolutely great - start counting the free money from the government.

If, on the otherhand, you can't guarantee the above then you may wish to forgo the 'free' money, invest privately and have the flexibility to manage your savings/investments as you see fit.

The bottom line is it's all down to the individual, they can choose the best method which enables them to save for the future (if they want to).

David.

[eternalkiwi]

If you prefer not to invest 4 or 8% of your gross income, you can still join KiwiSaver directly with a provider, save the minimum $1042.86 per year and still qualify for the full Government top ups (Kickstart, Member Tax Credits and Fee Subsidies). You can then focus the rest of your savings into either a mortgage or other investment fund that offers more flexibility.

As AndrewandJane said if you sign up your children they can have a nice small nest egg when they turn 18. Over 13 years (5 yrs - 18 years) the Government Contributions would be worth something like $2600 (based on 5% net return after fees which may be a little optimistic) Plus the minimum contributions the Kiwisaver Scheme requires (at least $5-10 per week).
Once your children were working for 5 years (paying PAYE) and were at least 18 they could also be entitled to the First Home subsidies.

KiwiSaver is also available to Self Employed people, and possibly people from overseas who have a principal base in NZ at time of joining.

Self employed people or people in NZ who are working for an overseas company would not receive Compulsory Employer Contributions from April 2008. But they do get the Kickstart ($1000), Member Tax Credits (up to $1042.86) and Fee subsidy of $40 per year (paid in two 6 monthly installments).

People who are in NZ and are not working may also be eligible to join KiwiSaver and gain the Kickstart, Member Tax Credit and Fee Subsidies.

Shawn

[urban78]

I said yes, my employer is also offering life insurance as well for whoever signs up and chooses the option to be "locked" into the scheme until you are 65. I had thought about superannuation before but had been a bit lazy with the paperwork and stuff but I guess I should get onto it now ;)

[miep]

I also said yes. My employer is contributing 4% starting now, I have to admit that that was the decider. Once you have been contributing for a year you are allowed to use some of the contributions for paying off your mortgage if your scheme allows that.
I'll probably go with a growth option for now (in foreign shares as the NZ$ is so high now) and if I need to, change to a provider that gives me the mortgage option.

[marky]

This is not entirely true. When signing up to KiwiSaver everyone gets 3 months to decide: -
a) which company/provider they would like to use to invest their money
b) which type of investment plan offered by that company/provider

If after signing up, you don't make a choice within 3 months, the IRD will assign you to one of the six default providers, who will in turn place you into their most risk averse investment plan (most likely a bank account earning a standard interest rate).

What Kat is refering to is the scenario when people want the greatest return on their investment and they choose plans with greater risks associated with them i.e. investment in stock markets. This is the same as investment outside of KiwiSaver - if you want to go for the big money, you must also be prepared to lose money.

My own 2 cents worth (bearing in mind I'm not a Financial Advisor) - if you can afford to save at least the minimum (and this may increase in the future), and guarantee you'll still be in NZ when you retire and know you'll never need to call on those savings prior to retirement age, then KiwiSaver is absolutely great - start counting the free money from the government.

If, on the otherhand, you can't guarantee the above then you may wish to forgo the 'free' money, invest privately and have the flexibility to manage your savings/investments as you see fit.

The bottom line is it's all down to the individual, they can choose the best method which enables them to save for the future (if they want to).

David.

what i can't work out is whether it's best to go for a kiwisaver or an employer's superann.scheme

[Super_BQ]

We need to address some serious issues here.

1) $1000 towards your 1st home? Up to $5000 if you stay in the plan long enough.

Has anyone thought what the housing prices will be in 5 or 10 years time? A $1000 wouldn't pay the conveyance fees by the lawyers and $5000 is a peanut of a deposit for a home that will be near $1 million (in Auckland) in 10 years time. Have we forgot the time value of $ ?

2) Inflation

There is no nest egg for your children because the contributions are too small to make a significant return. We need to talk in "REAL RETURNS". A 5% annual return is nothing when you have near 4% annual inflation. So your real return is 1% Ever wonder why housing mortgages are around 9 or 10% today?

It's so clear that it's almost stupid. Banks are paying 8% on term deposits. Less tax, you would still be better ahead than the claimed 5% that Kiwi Saver would perform - and it's guranteed! Anotherwords, Kiwi Saver would do better to their investors if they put their $ in the bank.

The choice of investment managed funds within Kiwi Saver is too restrictive. I call it double dipping. Not only you pay an administrative fee in Kiwi Saver, the managed fund itself also takes an administrative fee (hidden in the many forms as trailer fees).

This was the arguement for many decades in Canada. Fact being, the majority of managed funds do not beat the market index return. That is, if you took the brainless approach and bought shares (ie. Nasdaq: QQQ, S&P500, etc - which mimics the return of say the top 100 or 500 companies in the index), you would do better than giving the $ to the managed fund that tries to pick individual stocks for you in their portfolio.

Would NZ managed funds be any different? I would be very surprised if after 10 or 20 years to see any proven track record.

If it wasn't for the new Foreign Investment tax laws, I would advice those to invest in Warren Buffet shares BRKB or BRKA (for the welathy). No man has made more $ for their investors than Buffet - taken from their website (http://www.berkshirehathaway.com/letters/2006ltr.pdf)

Over the last 42 years (that is, since present management
took over) book value has grown from $19 to $70,281, a rate of 21.4% compounded annually.*

Since the majority of NZ investors prefer dividends rather than to building net worth, I don't think those gains would be comparable.

BTW, i'm self employed so I would be a fool to give my $ to the gov't thinking they could do a better job than what Buffet has done. Long live Milton Friedman (http://en.wikipedia.org/wiki/Milton_Friedman).

BQ

[stephenandjulie]

If I am right (maybe I am not) the Kiwi saver may not be very secure, as in the UK loads of exisitng private companies are struggling with their pension schemes.. As an ex member of the NHS their pension scheme was and is pretty good and it is a goverment scheme and the goverment get the cash making them responsible for it. As Kiwi Saver is being farmed out to private companies 6 or 8 (not sure how many) I would urge all you guys to give serious thought to what would happen to your money should any of these companies go belly up. Will the NZ gov cover your losses????


Also don't for get in the 80s we were all urged to get endowment morgages and we all know what happened there.....

[neilw71]

If you prefer not to invest 4 or 8% of your gross income, you can still join KiwiSaver directly with a provider, save the minimum $1042.86 per year and still qualify for the full Government top ups (Kickstart, Member Tax Credits and Fee Subsidies). You can then focus the rest of your savings into either a mortgage or other investment fund that offers more flexibility.

Shawn


Shawn - be careful as this is not true if you are employed. IRD will cross check that you are employed as you are contributing PAYE and force the employer to contribute the 4% min from your salary - they have no choice.

We also thought it would be an easy bunch of free money for my wife who was going to open a scheme and just throw in the $20 per week. Then a friend who works for Fidelity as their Kiwisaver expert pointed out the problem - we phoned the IRD helpline and they confirmed they would force the employer to deduct 4%.

Neil

[eternalkiwi]

Hi Neil,

That advice is VERY interesting.
I will reconfirm that this week, but it does go against what I have been told by many people involved with the project.

I'll keep you posted.

Shawn

[MarkS]

Just read BQ's post, and there's a couple of things in there that really do need replying to.

It's so clear that it's almost stupid. Banks are paying 8% on term deposits. Less tax, you would still be better ahead than the claimed 5% that Kiwi Saver would perform - and it's guranteed! Anotherwords, Kiwi Saver would do better to their investors if they put their $ in the bank.

Well, not really. You're using a very low estimated annual return, and using a deposit rate near the top of an interest rate cycle. The reality is, bank deposit rates will not stay at 8% over a (say) 20 year period, and if you're invested in a stock market based plan (as you really should be if you're on any time frame over 10 years) you would be overwhelmingly like to get returns far in excess of the bank deposit rate.

Fact being, the majority of managed funds do not beat the market index return.

Very true - managed funds have an appalling track record in high fees and under performance. However, there are decent options for KiwiSaver out there. One that looks good on first glance at least is NZX's SmartKiwi (https://www.smartshares.co.nz/smartkiwi/aboutsmartkiwi/) scheme - total fees of 0.85% and invested in NZX and ASX trackers. Even if there's something bad in the small print there, there are other tracker options out there.

If it wasn't for the new Foreign Investment tax laws, I would advice those to invest in Warren Buffet shares BRKB or BRKA (for the welathy). No man has made more $ for their investors than Buffet

This bit is just insane! Not the suggestion that you might invest in BRKB (although there are some good reasons why you might not), but the idea that you wouldn't just because of the new FIF rules! So BQ is here drawing our attention to a stock that has compounded at 21.4% for many many years now, with the clear implication that such performance will continue - but then said, don't invest in it because you'll have to pay up to 2% of the value in tax per year. That's just ridiculously backwards thinking. Invest in the product or stock that you think will give you the best returns after tax and fees. If a product with higher tax or fees gives better returns, clearly it's worth paying that money!

BTW, i'm self employed so I would be a fool to give my $ to the gov't thinking they could do a better job than what Buffet has done.

Of course, money invested in any KiwiSaver product isn't being "given to the government" - that's just flat out incorrect.

cheers
Mark
(not currently in a KiwiSaver scheme, and not sure that I'm going to join one anyway)

[Super_BQ]

The reality is, bank deposit rates will not stay at 8% over a (say) 20 year period, and if you're invested in a stock market based plan (as you really should be if you're on any time frame over 10 years) you would be overwhelmingly like to get returns far in excess of the bank deposit rate.


The reality is you can lock your $ in the bank for a guaranteed 8% for next year. We have no proof what KiwiSaver's fund performance will be by next year. Furthermore, there's no reason why a person can't contribute to KiwiSaver later on when you can no longer lock $ at the high interest rate.

One that looks good on first glance at least is NZX's SmartKiwi scheme - total fees of 0.85% and invested in NZX and ASX trackers.

We've gone over this before, global diversification can not be obtain by solely investing in NZ & Australia. But tell it like a politician "Finance Minister Michael Cullen said: "Today's action is a reminder to people if they over invest in the New Zealand dollar they could suffer losses (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10444876)." I can understand why so many invest in real estate. If they can't invest in overseas currencies or funds, what options do they really have? Though his statement is contrary to his FIF tax rules he's put in.

So BQ is here drawing our attention to a stock that has compounded at 21.4% for many many years now, with the clear implication that such performance will continue - but then said, don't invest in it because you'll have to pay up to 2% of the value in tax per year. That's just ridiculously backwards thinking.

My point being, who could do it better? Perhaps it's a self fulfillment prophecy that Cullen placed in these FIF rules just to prop up Kiwisaver. The only thing I see the NZ gov't doing is interfering with people's $ and spoon feeding them where they should put it.

Of course, money invested in any KiwiSaver product isn't being "given to the government" - that's just flat out incorrect.


No with KiwiSaver, it means I have only a set # of groups (appointed by the NZ gov't) I can choose to manage my fund. None of them with a better track record than I can find elsewhere globally.

Remember the whole world trades on Wall Street (for eg. international companies like Sony have a seat on the NYSE). If NZ investors don't want to partake, more power to them...

[wilson182]

OK, I can't post on specific comments on the above post, I simply don't have the knowledge to do so:o . But, surely Kiwisaver is not aimed at the likes of superBQ. To me it seems that Kiwisaver is aimed at the huge percentage of people who currently have no provision for retirement other than the Govmt superannuation. I think, similar to the UK, the govmt have not "interfered" and we have ended up with an unacceptable amount of people living below the poverty line when they retire. Personally, I think encouraging people to save is a good thing - its not compulsory people can opt out, and there are some tax incentives for doing it. And I know it smacks of a Nanny State, but "damned if you do and damned if you dont" comes to mind.

Debs

[Anita & Marco]

and guarantee you'll still be in NZ when you retire and know you'll never need to call on those savings prior to retirement age, then KiwiSaver is absolutely great - start counting the free money from the government.
David.

My piece of warning: when you are not a very flexible person, so you know you will stay here forever and you do not want the flexibility to have your money earlier than 65, then Kiwisaver 'could' be the way to go!

But, maybe you want to retire at an earlier age or at least when you are ready for it? The governement might raise the retirement age from 65 to 67 or even higher in the years to come (like is happening in European countries at the already)?

Of course a lot of people in NZ are dependent on the superannuation only, which is not an amount most people can live on, but especially the people on the low wages will not be able to afford to pay 4% of these wages in Kiwisaver.

All in all, I think it is only a good way of saving for a small number of New Zealanders, but it is best to get some decent professional advice for your own personal case.

Good luck with the decision,
Anita

[ruthyroo]

We've gone over this before, global diversification can not be obtain by solely investing in NZ & Australia. But tell it like a politician "Finance Minister Michael Cullen said: "Today's action is a reminder to people if they over invest in the New Zealand dollar they could suffer losses (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10444876)." I can understand why so many invest in real estate. If they can't invest in overseas currencies or funds, what options do they really have? Though his statement is contrary to his FIF tax rules he's put in.

Remember the whole world trades on Wall Street (for eg. international companies like Sony have a seat on the NYSE). If NZ investors don't want to partake, more power to them...

I have been wondering how an investor in NZ actually goes about investing in American or European funds? Do any NZ finance companies offer US or UK trackers, and what are the fees for these, if they exist? And are there any tax breaks or advantages or encouragement to pursue stocks and shares type investments, compared with all the mile-wide tax loopholes for property investors?

[ruthyroo]

OK, I can't post on specific comments on the above post, I simply don't have the knowledge to do so:o . But, surely Kiwisaver is not aimed at the likes of superBQ. To me it seems that Kiwisaver is aimed at the huge percentage of people who currently have no provision for retirement other than the Govmt superannuation. I think, similar to the UK, the govmt have not "interfered" and we have ended up with an unacceptable amount of people living below the poverty line when they retire. Personally, I think encouraging people to save is a good thing - its not compulsory people can opt out, and there are some tax incentives for doing it. And I know it smacks of a Nanny State, but "damned if you do and damned if you dont" comes to mind.

Debs

My first reaction to the post was 'well people should d**n well get educated about finance and money and look to secure their own futures!" but I quickly realised that was rather reactionary and probably plain mean! I think you're right Debs, the majority of people in the UK as well as NZ grew up in a world where there were decent state pensions, and good employer pension schemes - but that world is nearly gone now. My FIL worked for the post office for 45 years in the UK, and retired recently and is one of the last to get a decent employer-contributed pension to take with him - none of his younger colleagues will have that opportunity.

Having spent some time trying to educate myself about investing, especially over the long term, and alterntives to / pitfalls of traditional pensions etc I have observed that the financially literate among us are always keen to explore any investment vehicle that presents itself especially anything endorsed by the Govt- and this one really doesn't impress them. I don't think either MarkS or Super BQ think the Kiwsaver is a particularly useful or good investment vehicle - they are arguing over each other's arguments (men!) So they look at Kiwisaver and see something that is really pretty rubbish compared to a number of other long-term investment strategies - but as you say, kiwisaver is better than nothing (perhaps) for those that otherwise wouldn't save a penny between now and retirement.

Personally IMHO if financial providers start to jump all over something new and talk it up it's generally an indication that there is something major in it for them - and that generally means less in it for the investor / customer! Gareth Morgan speaks the trooth.

[Super_BQ]

My apologies for starting a huge arguement. It's just that when we're talking about people's life savings, it's hard to keep a blind eye as there's no such thing as being over informed.

Of course a lot of people in NZ are dependent on the superannuation only, which is not an amount most people can live on, but especially the people on the low wages will not be able to afford to pay 4% of these wages in Kiwisaver.


You've hit the bulls eye there. The sad truth is Kiwi Saver will have minimal impact on those on the low wage bracket while those on the high end would look for a better avenue (such as buying more real estate in NZ). What NZ gov't should of done is impose capital gains tax on those land tycoons.

But, maybe you want to retire at an earlier age or at least when you are ready for it? The governement might raise the retirement age from 65 to 67 or even higher in the years to come (like is happening in European countries at the already)?


There's also another aspect most people forget. In NZ there's Gift Duty. Meaning that even if you pick the fruits off the superannuation (Kiwi Saver), you also have a problem of disposing the funds before you end up in a wheel chair in an eldery rest home. As long as you're alive, you can end pay as much as 25% tax for every $1 you gift over $75,000. The 1st $27,000 is tax free each year. Of course in 30 years time, $27,000 would not be much $ and it makes me wonder why the NZ Gov't doesn't 'index' these figures according to the rate of inflation?

...and retired recently and is one of the last to get a decent employer-contributed pension to take with him - none of his younger colleagues will have that opportunity.

That's an important consideration as we need to question if Kiwi Saver will fall in the same footsteps? We can only wait.

I have been wondering how an investor in NZ actually goes about investing in American or European funds? Do any NZ finance companies offer US or UK trackers, and what are the fees for these, if they exist? And are there any tax breaks or advantages or encouragement to pursue stocks and shares type investments, compared with all the mile-wide tax loopholes for property investors?


If you asked me pre-911, opening up an account online from a US discount brokerage was as easy as walking into a NZ local bank to setup an account. Once the account is funded (ie wire transfer, cheque payment, NO CASH), you could buy any of the listed stocks (or funds) that are listed in the N. American stock exchanges. As easy as sending $, you can also wire the funds back to any account you have worldwide.

Unfortunately today, you can say all bets are off with 2 key distinctions:

1) With IRD's recent FIF rules, once your portfolio breaks $50K NZ in value, then you're required to pay taxes on the paper value gains - which kinda defeats the purpose of investing for retirement (as paper losses are not creditable to offset the tax paid on the gains). In fact, I spoke to one of Mr. Cullen's representative and the whole idea of implementing the FIF rules is to take away the tax advantage gain for the wealthy that have funds invested overseas (my guess, most likely to prop up Kiwi Saver later on). I call this an act of Robin Hood.

2) Post 911, the US gov't has placed great restrictions on how banks serve foreign nationals. You will find almost every online discount broker in the US today will not allow NZ residents to open an account. Though, there may be the possibility of opening an account when you step foot in the US by visiting a branch, but remotely there's no way. It has something to do the anti-laundering laws and anti-terrorism exploiting the US finance markets.

Notwithstanding 1), one can still obtain overseas funds through their local NZ broker or bank - mind the high broker fee.

[bartons]

We're suspicious of the Kiwisaver because of this:
http://stuff.co.nz/292398a17218.html
But maybe one cartoon is not enough to base a decision on...

[MarkS]

I don't think either MarkS or Super BQ think the Kiwsaver is a particularly useful or good investment vehicle - they are arguing over each other's arguments (men!) So they look at Kiwisaver and see something that is really pretty rubbish compared to a number of other long-term investment strategies - but as you say, kiwisaver is better than nothing (perhaps) for those that otherwise wouldn't save a penny between now and retirement.

:laugh Actually, I think KiwiSaver is a pretty decent scheme. Not perfect, not a no-brainer for everyone, but a system that will be good for an awful lot of people in this country. I also think it'll be be good for the country as a whole. The immaturity of NZ's capital markets compared to the UK or US is often complained about here (and indeed on this thread), but schemes such as KiwiSaver will cause more money to flow into the markets, and the more sophisticated products that don't yet exist will start to appear as that flow of money needs a home. Australia is a great example here - their financial system grew massively once compulsorary superannuation kicked in

A few other points:

it makes me wonder why the NZ Gov't doesn't 'index' these figures according to the rate of inflation?

Agreed - lack of indexation is pretty shocking. This is a political problem, 2 or 3 years ago it was announced that income tax thresholds would be adjusted for inflation every three years. The opposition mocked these plans, famously calling them the "chewing gum tax cuts", and the plans were abolished in the most recent budget. Ridiculous - politics at its worst there.

I have been wondering how an investor in NZ actually goes about investing in American or European funds? Do any NZ finance companies offer US or UK trackers, and what are the fees for these, if they exist? And are there any tax breaks or advantages or encouragement to pursue stocks and shares type investments, compared with all the mile-wide tax loopholes for property investors?

Yes it is possible to invest in American or European funds, although the choice is not as good (for obvious reasons) as it would be in America or Europe. For a start, there are plenty of "international equity" options in KiwiSaver, and plenty of companies that offer international managed funds. Google can get you started here. You can also buy UK or US equities directly via NZ brokers such as Direct Broking (http://www.directbroking.co.nz), although they ain't cheap! It is still possible (so I'm told) to open accounts directly with US brokers, although as BQ says the US legislation of the last few years has made it extremely difficult.

As regards the tax breaks, well the biggest (the "grey list") has of course just gone. I still am of the opinion that the FIF rules are not that bad - after all, you will pay less tax on a sum of money invested overseas than you will if you put it on deposit at the bank at 8%! Much as I agree that the taxation of paper profits is quite ridiculous, the FIF rules are not nearly as hysterically bad as they are often described here. (But that's just my opinion, and I hardly need to point out that no one here seems to agree with me! :( ) And as for the "tax breaks" in property investing, it's safe to say they're a lot smaller than in commonly suggested - it's more a political problem in enforcing it. And no politician is going to mess with people's houses if he/she can avoid it!

the whole idea of implementing the FIF rules is to take away the tax advantage gain for the wealthy that have funds invested overseas

Of course it is! Previously, the tax system actively encouraged people to invest their money outside the country. Why on earth would you expect a government to leave that situation in place? The new FIF rules mean that it is roughly equivalent to invest in NZ/Oz or worldwide (yes, with possible a slight bias to local investment) - that doesn't really seem unreasonable does it?


Of course, money invested in any KiwiSaver product isn't being "given to the government" - that's just flat out incorrect.

No with KiwiSaver, it means I have only a set # of groups (appointed by the NZ gov't) I can choose to manage my fund. None of them with a better track record than I can find elsewhere globally.

That is again flat out incorrect. The government has appointed a small number of "default providers", but there are another 30 or so providers not appointed by the government who you are quite welcome to open your KiwiSaver account with. That's quite a lot of choice to be starting out with. Also - it can only get better! As money starts to move into the accounts, providers will consolidate, new providers will emerge, products will disappear, more innovative products will replace them - if there's a gap in the market, and the demand exists (as it will once a few years have gone past), the gaps will be filled and the demand supplied.

In NZ there's Gift Duty. Meaning that even if you pick the fruits off the superannuation (Kiwi Saver), you also have a problem of disposing the funds before you end up in a wheel chair in an eldery rest home. As long as you're alive, you can end pay as much as 25% tax for every $1 you gift over $75,000. The 1st $27,000 is tax free each year.

This is another subject that BQ gets very exercised about, and I really don't understand why. For the vast majority of retired people, what's going to be their biggest concern: being able to live off their super/KiwiSaver scheme comfortably, or that they can't give away $27k without paying tax? Gift Duty is no doubt very upsetting for a small number of very rich pensioners - for the vast majority of us here, it's almost completely irrelevant. And even if it did become relevant - wouldn't you like to have the problem that you're so rich you're having to pay some entirely new taxes? :laugh

Apologies, I've written another stupidly long post!

[incredible hulse]

Answered no. Personally think the charges are too high, lack of tax breaks and projected funds not good enough yet to encourage me to lock my money in for another 30 years. My current strategy of playing the UK/NZ money exchanges is a better option for me personally