[marcia]

I've just been on with our bank about cancelling a car insurance policy (we bought dad one for his 3 months here and have just sold it so we've got refund on the insurance)

The lady on the other end asked me if I'd thought about Kiwi saver accounts for our kids, we already have headstart accounts for them which i manage online. But she said they would get $1000 each free, (thats $3000 for our lot in total!) and i wouldn't have to add to that account if i didn't want to??!! I've just had a real quick look at the website, and there would be monthly fees to pay and an annual 'management fee' - so is it worth it - or not? Has anyone else opened them for the kids?

BTW - This is ASB bank - are they all the same or is it better to shop around if we go for it?

HELP - I hate having to sort stuff like this out! :wah

[mgbridges]

I just knew there had to be a catch somewhere! DS brought home a flyer from school from the local ASB branch about the 'free' $1,000 if you open a kids Kiwi Saver account - no mention of the fees though! I've been meaning to get around to doing something about it so might ask a few more questions.

Will be interested to see if anyone else has any other info as I too hate sorting things like this, don't even talk to me about sorting our UK Pension etc! :(

Anneliese

[seagulls]

I would say that Kiwisaver is a definite for children.

The government do give you $1,000 one off payment for their Kiwisaver account and in addition to this they also give you a $40 annual payment for fees.

So the $40 would cover the fees that you would be charged by most of the providers on such a small balance.

I also believe that most companies do need you to pay in to open the account. For example, $200. So you would need to lock this money in to get them started.

[thezorbster]

I've just started looking around for Kids kiwisaver accounts so I know there are quite a few, not just ASB. Haven't yet got to the stage of choosing one but I imagine all will charge fees. I would say it's still worth doing though as seagulls said, you will get an annual amount which should cover the fees so it's basically $1000 for your kids for doing nothing. Has to be worth it doesn't it?

[marcia]

I've had a lady on the phone from the ASb today about the kiwisaver 9very swift off the mark!!) She is sending me some forms and more information about them, but said they have 5 different investment options (more things to look at :( ) I asked about fees and she said there weren't any - so will have to double check that information because it conradicts what is on the website.

Will keep you informed what i find out! :nice1

[Steadybears]

Our 18 year old was offered the Kiwisaver -and wasnt told of any extra fees!! How come they dont offer the same for me - or is it only for the young and good looking!!!

Jayne

[Marie P]

I finally opened my 3 accounts today and took the $1000 each for them .

No mention of fees ,this was with the National Bank .

She said the money cant be touched till they are 18 but they will have the interest.

Marie x

PS You need the kids IRD numbers for this too.

[incredible hulse]

I would have thought the fees were the scheme admin charges which typically come out of the managed fund profits. Shouldn't be a cost to you (apart from dilution of profit) - that's the way I've read it anyway.
Got to apply for the kids IRD numbers now ...

[seagulls]

All schemes will charge the members a fee - if they have told you there is no fee then they are wrong
Admin Fee (%)
Trustee Fee (%)
Monthly Fee ($ per month)

Generally, investment rules state that the nearer you are to retirement then the safer your investment should be (cash, conservative) but the further you are away (children) then you should go for growth funds. Growth funds invest in equities which generally perform better over the longer term.

[Debbie]

I finally opened my 3 accounts today and took the $1000 each for them .

No mention of fees ,this was with the National Bank .

She said the money cant be touched till they are 18 but they will have the interest.

Marie x

PS You need the kids IRD numbers for this too.

OK I'm a financial dunce and I'm lazy and I can't think of many things worse than sitting reading tons of financial gobbly gook small print. (Which is why I'm a financial dunce), but I thought you couldn't touch your kiwi saver money until you retired. I know there is something about being able to take some money out for a house deposit.

When I talked to the lady in the bank I thought she said that the kids would have to start paying in at 18. Not that they would be able to get the money out. Have I got the wrong end of the stick here. I thought that kiwi save was the closes thing to pension savings so it was money for retirement. What's put me off getting them is that the children would have to make payments into the a/c from 18 until they retire and I'm not sure they will thank me for making such a financial commitment for them. Can they opt out and not lose the money?
Debbie

[BaldyBeardyBloke]

We have opened kiwi saver saccounts for the kids with ASB. Took some advice, but ASB's kiwi saver scheme's are supposed to be as good as anyone's and they have a fair amount of choice.

If opening an account for kids the govt will pay in $1240 this year (equivalent of $20 a week). There are fees -I think about $40 a year, but you get a tax credit as the adult which compensates you for those fees, so in effect the schemes are free, or minimal net charges.

Any cash you pay in the kids can take out or use towards a starter motgage when they get to 18, but they can't take out the govt contributions - these form a pension fund at 65.

For adults there is no 'money for nothing' unless you pay in. If you pay in the the govt will match your input up to a total of $20 a week ($1240 a year). Again, you can get at your bit, but not the govt bit.

The choices I mentioned above are around how you want the cash in your scheme invested - i.e. in high, medium or low risk equities.

In terms of the original question here though (i.e. round kids schemes). Yes there is, effectively, a free $1240 fund available to your kids with no obligation to pay anything in ever again and it will just sit there for 60 odd years and gain interest for them.

Whether this will still be the case after an election and likely change of government remains to be seen of course. So, in other words, get one for your kids now, while you can. It costs nothing or at most a few dollars a year. This option may or may not exist post election.

I must stress I am no financial wizard, the above is my understanding, although i have done a fair bit of research into it.

Hope it makes sense.

[mgbridges]

Thanks BBB, something to add to my 'To Do' list for next week once DS is back at school.

Anneliese

[Wonderbob]

Kiwi saver is a no brainer. Employees get $1000 starter from the govt, plus tax credis from the govt, plus 1% per year of your contributions from your employer, rising to 4% ($ for $) after 4 years, so why wouldn't I join? Even my wife who is self employed has joined - gets the $1000 + tax credits + fee relief. Kids are also being signed up, why wouldn't you? It's not a perfect scheme, but 1000 times better than what was available previously from this hapless government......Roll on John Key!

[nippa&pippa]

What about type of fund? i couldn't make my mind up on taking low, medium or high risk type of fund for our children's?

[Wonderbob]

What about type of fund? i couldn't make my mind up on taking low, medium or high risk type of fund for our children's?

I've picked a conservative fund for now, whilst the world economy is down, easy enough to change fund types when things improve in the next year or so, just adjust it to suit the market.......

[BaldyBeardyBloke]

Actually, the best time to have an aggressive fund is when the market is down and there is a long time until you even want to think about cashing in.

i.e. the fund will buy up shares at rock bottom prices in stocks that traditionally vary a lot, so the potential return is much greater. The skill is then in selling them again at the high point. This is why choosing a fund manager, or organisation you feel you can trust is important. Yiu can't really go too far wrong with a major banking organisation.

You can always switch between 'risk' levels at any time.

Having said that, for kids schemes in particular, the money will be sat there for so long it will gain anyway.

Hark at me, investment specialist all of a sudden.

The best advice IMHO is to do what you feel most comfortable with. And remember it is a (very) long term investment you are looking at, so the current state of the markets at any given point in time is almost irrelevent (unless you're 60 and about to cash in).

[seagulls]

If opening an account for kids the govt will pay in $1240 this year (equivalent of $20 a week).

For adults there is no 'money for nothing' unless you pay in.

Again, you can get at your bit, but not the govt bit.



I think when you set up a Kiwisaver for children you only get $1000 and then you receive two equal six-monthly payments of $20 so $1040 p.a.

For adults; this also works for people who are not in employment. So you could set up an account for an other half who is not working and also receive the $1040 per year. Strangely, because they are not paying tax, they are also entitled to the tax credit of up to $20 per week but you have to contribute $20 per week. However, I would say that receiveing and initial 100% return on your money is not a bad way to start.

If you do take your money out of Kiwisaver for whatever reason, other than retirement; financial hardship, emigration etc. I believe that the only amount you cannot take is the tax credit amount ($20 per week).

I would say that the Kiwisaver scheme is a no-brainer for certain people:

Children
People without a job
People with less than 5 years to retirement

For everyone else I believe it is on a case by case basis.

At the moment I don't really believe it matters who you choose because a lot of the companies are linked anyway and also I don't believe the market is big enough to support the 60 or so current providers. Therefore in a couple of years it will have narrowed to less than ten. I believe that the bigger players have already been approached by some of the smaller companies asking if they would be willing to encorporate their Kiwisaver business.

[BaldyBeardyBloke]

I would support the above from what I have investigated. Indeed 52 (weeks) x $20 is $1040, not $1240 as I stated. Back to school for me!

I also tend to agree that it will probably be just the banks and maybe a few other major financial institutions (Sovereign and the like) that will run KiwiSaver in the long term.

A lot will depend what happens if National get in and what changes they make to the basic rules of the scheme. They say they won't scrap it, but imply they will change it and/or create something else.

Time will tell. You can only act on what is current, and if you always wait for the next, supposedly better, thing you'll be waiting forever.

At the risk of sounding like a broken record, however, how can you not sign the kids up. It's as close to free money as you'll ever see.

[nippa&pippa]

I would say that the Kiwisaver scheme is a no-brainer for certain people:

Children
People without a job
People with less than 5 years to retirement

For everyone else I believe it is on a case by case basis.



What about "stay at home mum"? Can they have kiwisaver without paying anything into it because i am not paying tax but my OH is....

[seagulls]

"stay at home mum"


A stay at home mum would definitely benefit from Kiwisaver.

You will get $1,000 one-off payment
$20 to cover fees every 6 months (should more or less cover the fees)

If you can afford it also you could pay an amount per week of up to $20. The government will match your weekly contribution. You could obvioulsy pay in more than $20 per week but the govt will only match up to $20

[Georgebulldog]

Hi Sophia
I've just been told to get one aswell by my bank manager, OH called about something else & asked about kids one & he asked about me & said to get one going so I think I may just have to, can't turn down some free $$$$

[Bennington1]

Hi Guys

Without being negative about something for nothing a few points to consider.

The National party are unlikely to continue the free part for long when they have been elected.

The access to funds is extremely difficult unless retiring or buying your first home, which will be the first time our kids can enjoy the spoils.

There are also calls to abolish the government assistance as in discriminates against non kiwi saver members.

They are already considering when too raise the retirement age to 67, and thats just for starters the talk is about 70!

Whilst i fully agree and support saving, Rabo plus is currently paying 8.80 for six months on $1000, and thats in cash.

As a migrant i am mindful of the fact that people of more likely to move across borders these days and do not wish to lock my childs savings into a country they may possibly leave.

Just my thoughts and ramblings but be aware of the potential lock in.

[seagulls]

I fully agree; there are limits to withdrawing money.

However, if one of the reasons is that you may move to another country then you can withdraw for this reason.

I believe you have to wait 12 months but then you can withdraw any contributions you have made plus the $1,000 put in by the govt.

[BaldyBeardyBloke]

Hi Guys

Without being negative about something for nothing a few points to consider.

The National party are unlikely to continue the free part for long when they have been elected.

The access to funds is extremely difficult unless retiring or buying your first home, which will be the first time our kids can enjoy the spoils.

There are also calls to abolish the government assistance as in discriminates against non kiwi saver members.

They are already considering when too raise the retirement age to 67, and thats just for starters the talk is about 70!

Whilst i fully agree and support saving, Rabo plus is currently paying 8.80 for six months on $1000, and thats in cash.

As a migrant i am mindful of the fact that people of more likely to move across borders these days and do not wish to lock my childs savings into a country they may possibly leave.

Just my thoughts and ramblings but be aware of the potential lock in.

All of the above is true, but particularly for kids and non-working adults this really is (at it currently stands) a case of filling in one form (per account) and having $1,000 put in there for you. There is no obligation to ever do anything else with it again or contribute futher if you don't want to, nor do you need to have any current savings.

Post election anything is possible and wholsale changes to the scheme are likely.

[Georgebulldog]

All of the above is true, but particularly for kids and non-working adults this really is (at it currently stands) a case of filling in one form (per account) and having $1,000 put in there for you. There is no obligation to ever do anything else with it again or contribute futher if you don't want to, nor do you need to have any current savings.

Post election anything is possible and wholsale changes to the scheme are likely.

The one reason I'll do it for myself & my daughter, can't turn down free money :raebanana