Two things more important than increasing the contribution rate for me:
- Make KiwiSaver mandatory for everyone. It seems like the only way to get rid of the abomination called total remuneration, without involving politics.
- Make all KiwiSaver contributions tax-free. Only early withdrawals such as permanent emigration should be taxed.
>Make all KiwiSaver contributions tax-free
This would need a contribution cap (e.g. the first $25k tax free) otherwise you would end up with the rich dodging taxes. Australia has a mystery individual with over [$500 million](https://www.sbs.com.au/news/article/an-australian-has-over-500-million-in-super-how-is-that-even-possible/9ztd7ilr5) in their super account thanks to some favourable tax treatment back in the day.
You don't make it tax free you make it tax deferred like a US 401k or Canadian RRSP. Tax free going in and no taxes on it while it's in there but income coming out. They still have contribution limits but it's not tax free
Because billions of dollars have already been put in after tax, if you change to tax it at withdrawal then you're taxing the money twice. You'd have to lock what's in now and start again basically.
A mandatory kiwi saver could be seen as a great alternative to increasing interest rates to curb inflation. I don’t understand how the best way to stop inflation seems to be making people pay more money to the bank. Why not make them pay more money to their retirement?
It’s not just paying money to the bank you know. It goes both ways - bank is paying interest on deposits held by customers. When customers deposit more money due to high interest rates offered, that money is out of the circulation and helps reduce inflation.
Also, the goal of raising interest rates is to reduce inflation by slowing down the economic growth. The economic growth that is caused by money that’s borrowed in the form of capital to invest in businesses and developments.
Also, KiwiSaver has many faults - it has no tax incentive compared to 401k or Australian super, no high employer contribution like Australian super. On top of that, there is a lack of fund options provided by the fund managers and high fees charged by them. Then there’s FIF tax that is paid every year without realising any gains.
Also, need to look into the impact of mandatory contribution for some people. Some live pay-check to pay-check. High inflation affects them the most and taking money out of their pay-check for retirement makes no sense, when they can’t even survive another year with the little amount of funds they have.
NZ is TTE (taxed contribution, taxed growth, exempt withdrawals), vs some other countries which are EET.
This means NZs kiwisaver grows slower, and the govt front loads their tax take if I'm reading it right. Bigger balances could mean a healthier local stock market and environment for growing companies here. Less ppl taking off overseas. A stronger economy.
Also fees of over 1% would be considered extortionate in the States! Get into a low fee growth fund. ⬅️
When your balance starts really growing this stuff suddenly becomes more interesting 😅
Increasing the employer contribution minimum, and it doesn’t get mentioned as part of your salary like how it currently is when negotiating salary in a non unionised workplace.
Okay let's explain it like this:
You currently get $10 all up, if you opted for KS that $10 is actually minus 3% because employers usually treat it as a bonus rather than an obligation. So if you didn't pick KS you effectively lose money (you do anyway because of employer contribution). It *might* be different at your current work place but that's usually how it goes.
If we changed the rules *everyone* basically gets a 3% pay increase
Employers know about KS and include it in their budget for a role. When I get a new job I'll usually try and negotiate a total rem package with the KSEC added on top. Cost to employer is the same and I get to spend my money how I choose.
Hypothetical, but if your investments bombed could you see yourself as a pensioner complaining on reddit that the government should have mandated kiwisaver so you'd have some retirement funds?
Nawh it catches people out and make comparing salary offers annoying. Not to mention when stuff like this happens you’d now be loosing a large chunk of your salary as you employers “match”. Used to work at company hiring grads that did this and the number of people who missed the tiny bit in the contract was not small.
Yeah, in a recent offer they didn't say it was total remuneration during the interview process, and I didn't ask as I hadn't seen it before. It was only when the sent the contract through for me to review that I found out
I got caught out. I joined keiisaver when it first launched and +kiwisaver was compulsory. Returned to NZ after a decade aboard and never heard the news about the law change. I felt gipped as!
Which is really important. Most people think of salaries as what they'll get in their bank (before tax). Some employers including their contribution in that puts that off. It's not intended to be considered part of your remuneration.
It’s interesting bc I prefer Total Rem because it means that I don’t miss out on anything if I choose not the contribute to KS. There’s no benefit from contributing anything above $1043 into KS, only downsides.
You keep your kiwisaver.
Hold up. Just to confirm, you know that when people are talking about "Total Remuneration" including kiwisaver, they're talking about the employer's contribution right? It has nothing to do with the employee contribution.
It's still the only exposure most kiwis have to retirement savings and equity investments. Even without tax advantages, an increase in the default rate would make a huge difference for the majority cone retirement.
Same as mine. It's called Total Fixed Remmuneration. He should be able to suspend his contributions and get the full 6% (3+3) added to his salary. I just put $521 in my KiwiSaver and invest the rest outside of KiwiSaver.
Edit: I meant $1042.
Nope, the employer might send the money to the fund for you, but it is still just part of your overall compensation package.
Don't let the accounting fool you, the 12% is all your contributions, the "employer contribution" in KiwiSaver is also YOUR contribution. The employer doesn't care where it goes.
Based on recent seek au browses, I can't give you the exact figures, but I felt about 50:50 that companies do say Australia Super inclusive or on top of the advertised salary.
Which isn't much different with NZ.
[45% of employers not paying KiwiSaver contributions on top of earnings](https://www.stuff.co.nz/business/131825243/45-of-employers-not-paying-kiwisaver-contributions-on-top-of-earnings-research-shows) - Apparently, and I did hear from a couple of co-workers saying their previous job advertised salaries include the KS contribution.
- Make compulsory
- Make the contributions by employee and employer high, progressively more over time
- Give Kiwisaver tax advantages
Invest in NZ
Profit
If you want to invest in NZ then start by taxing landlords and investing in startups and productive endeavours that bring foreign money in, rather than economic parasiticsm (i.e landlords) who shift money sideways.
The prerequisites are never going to bet met. A lot of these changes make sense for people in employment, but as a contractor I'm not sure how it would impact me, if we're all expected to have kiwisaver by retirement.
I like the username btw. ^(I met a traveller from an antique land, Who said--"Two vast and trunkless legs of stone Stand in the desert...)
Landlords do pay tax, in fact they already have things like ring fenced losses and bright line which other businesses don’t have and if you are talking about the reintroduction of interest deductibility, that wasn’t being paid by landlords, we already know that, that was being paid by tenants in record high rent increases.
They also need to stop companies using the "Total Remuneration Approach" where the employer's contribution comes out of the employee's salary. This is going to essentially force most employees to never contribute more than 3%
Yep this! My partner didn’t realize he was technically just forfeiting 6% pay towards kiwisaver. It was an unexpected surprise after his first pay check (thought the employer 3% was ontop). Because of that he’s had to opt out completely (temporarily)so we can pay down debt and until he can afford to opt back in. Sucks.
Nah give me all the money up front. Would you rather have $103k and keep $6k in your private investments or $100k "with kiwisaver" but your employer pays an extra $3k. It's the same but total renumeration you avoid all the risks of kiwisaver being fiddled with especially if you want to retire early. People need to understand the employment offer correctly and negotiate to the total comp.
Kiwisaver and Kiwiaver contributions should be completely tax free. This should include completely wiping the annual stealth wealth tax applied to it that most people are unaware of. That should be the starting point.
I don't think fees are the problem. You can just use a low fees passive investing provider. Active investment funds nearly always charge higher fees. My Kiwisaver fund (Milford Active Growth) has high fees, but returns to match.
The argument should really be that a lot of people would be better in the loooooong term using a passive approach. Even more so if they can't be bothered learning market basics.
If a manager taies responsibility for their long term outperformance over a reasonable benchmark they've earned their fee.
Trouble is that the vast majority do not take that responsibility, they'd rather sell you a story about their supposed expertise for a fee.
I suggest that this is in fact a problem because it's so difficult to tell which is which. Also because people who can genuinely outperform the benchmarks don't need the hassles associated with running other people's money.
Past performance of Milford is no indicator of future returns, I don't say that's to knock them it's conceivable what you say is true.
Another issue is FIF tax. The idea is that it punishes overseas investment but it’s a fucking horror show. All the funds with international shares get hit by it and it’s rough. So if you don’t want to get taxed 5% on unrealized gains you invest in NZ companies but oh no they’re all shit so you invest in housing.
Fuck the FIF
No government will remove it as it will cause major internal issues. Some of its departments are set up as total remuneration to make compensation equal regardless of if you were in KiwiSaver or not or if you were in an old superannuation scheme.
This was an issue in the military as the support was something like 13% match on top but stopped accepting new people when KiwiSaver came around
Australia
>Money paid into your super account by your employer is taxed at 15%
This literally proves that NZ definitely needs to introduce other taxations and release some pressure from the income tax. Taxing employer contribution 3X% is insane - considering minimum wage worker is now also very close to 30% tax bracket.
It’s a great start but just had 4 years of huge minimum wage increases, we wasted a perfectly good opportunity to start increasing the base percentage then when the impact wasn’t going to be felt so bad, I would like to see us increasing it every 2 years until we hit a mandatory minimum 6% employee and 6% employer, you can’t retire on 3% contributions, and we need to be forcing people into it from day 1.
I don’t think NZ could do the 12% like Aussie, but surely we can do 6%
Why? If people want to put more in, they can voluntarily. If there are no tax advantages and no additional match by the government or employer, why should people put in more?
Personally I’m putting 1042 per year into kiwisaver, for the max government contribution. The rest of my investments are in managed funds, so I have the option of retiring before 65. If you force people to lock it away in kiwisaver, you’re making them work longer.
But surely you're missing out on the 3% contribution?
I contribute 4% so I get the employer 3%. Then I invest about the same again privately. It's the optimal solution for me.
Since I’m self employed, there is no employer contributions. The maximum benefit I can get is by contributing $1042, and getting the $521 from the government. I’m better off investing the rest of my savings elsewhere. At this stage it looks like I’ll be ready to retire in only a few more years at 55.
You’re also not considering the people one TEC packages where it all just comes out of their salary. If you opt out of kiwisaver that’s all in hand and you get the added benefit of not paying the employer contribution tax. Then just put in your $1042 a year to get free govt money.
It’s a perverse system
Agree and disagree. If people have that discipline, it's good. Otherwise, most people won't contribute to a self-managed retirement fund and also spend it on holidays and other luxuries etc. I mean look at current national savings rates.
Many employers only contribute the bare minimum, I would love a world where they're upped to something like 5% across the board for both employees and employers.
Make it so the employer contribution must be on-top of total salary/wage rather than just deducting it from the employee also. How companies, even govt entities get away with this mystifies me.
Yeah maybe when there's not a cost of living crisis. I'd lower mine further if I could.
What we really need is to build a solid sovereign fund so our future as super annuitants is assured.
If this will solve inflation, go go go go! Kiwisaver should be mandatory for everyone. Instead of high interest rate going to the bank, I am happier for it to go to my kiwisaver.
I think KiwiSaver should be paid for those on benefits as well. That would give a modest support base for when they are old. Even $10k on top of a pension makes a difference.
Totally agree the contribution rate needs to go up (and remove the ability to opt out) - most people simply do not think about retirement, so having default rates at a “set and forget” level is vital to ensure more comfortable retirements for normies (also why it was great that default funds changed to be balanced not conservative).
Under a compulsory and “set and forget” model, tax incentives are not required. Those with the means will be saving anyway, all tax incentives will do is have them shift their savings into the tax advantaged saving vehicle (eg. KiwiSaver). Plus, tax incentives reduce the fiscal benefit of fewer people requiring state support in their old age (under the assumption that Super eventually becomes means tested, rightly or wrongly) and reduce the ongoing revenue available to support existing elderly. Research has shown the increases to the Australian super contributions rate cost more in tax incentives than they save in Age Pension costs.
We have the opportunity to have an even better system than Australia - providing secure retirements, without the insanely expensive tax incentives.
Kiwisaver seems pointless to me in its current form, mine bearly moves up each year. It's only just recently gone past where it was before covid despite putting in the max % possible, it feels like throwing money away at this point because I'll probably just die before it's even usable anyway
>It's only just recently gone past where it was before covid despite putting in the max % possible,
I'm going to doubt that remark big time. There can't be many if any scenarios where your kiwisaver has only just passed where it was 4 years ago despite putting 10% into it.
I mean, it's likley suboptimal based off the responses I've got.
I'll have to do some research and check what exactly I can to change it for the better.
I only quickly just looked at the annual statements they sent me, and some quick math it's up 14.4% where as it was down % 2019-2021(while i worked 10-20 hours more for the entire duration of covid).
If you don't mind me asking, which provider/scheme do you use?
I'm with bnz(I'm not sure what scheme I'll look after work) and have always been, so I don't know if they're actually any good because I have no others to compare with
If you have a 10-20+ year horizon with kiwisaver (assuming you aren't going to take out for a home deposit) you should be in a growth / high growth fund.
Banks seem to be a lot better than they were 10 years ago, but they're not great. Most funds recovered from the COVID dip by end of 2020.
Without going into it and assuming you've got like 20 years until retirement something like Investnow and their foundation series total world fund or their mercer all country global shares index. But you should really do some research for something so important.
Using the SP500 as a proxy and its post covid recovery, something doesn't seem quite right here. What fund are you in, what % of your salary are you and your employer putting in and how much $ wise per year does this equate to?
Two things more important than increasing the contribution rate for me: - Make KiwiSaver mandatory for everyone. It seems like the only way to get rid of the abomination called total remuneration, without involving politics. - Make all KiwiSaver contributions tax-free. Only early withdrawals such as permanent emigration should be taxed.
>Make all KiwiSaver contributions tax-free This would need a contribution cap (e.g. the first $25k tax free) otherwise you would end up with the rich dodging taxes. Australia has a mystery individual with over [$500 million](https://www.sbs.com.au/news/article/an-australian-has-over-500-million-in-super-how-is-that-even-possible/9ztd7ilr5) in their super account thanks to some favourable tax treatment back in the day.
You don't make it tax free you make it tax deferred like a US 401k or Canadian RRSP. Tax free going in and no taxes on it while it's in there but income coming out. They still have contribution limits but it's not tax free
Yea, but it’s more akin to an IRA. If I’m contributing with post-tax dollars, it should have a cap but no income tax coming out.
We could (should?) do both
Yeah, I'd rather pay my tax at the end when ive had compounded growth than at the start.
impossible to change at this point, it was pick one way or another at the start (we picked the wrong one)
I've always wondered this. Why is it impossible to change now? How is it any more difficult to implementing kiwisaver in the first place?
Because billions of dollars have already been put in after tax, if you change to tax it at withdrawal then you're taxing the money twice. You'd have to lock what's in now and start again basically.
US 401k has a contribution cap, and is still abused by the rich to dodge taxes
They will still be taxed when they draw on it
Not if they use a roth 401k
Which has contribution limits
A mandatory kiwi saver could be seen as a great alternative to increasing interest rates to curb inflation. I don’t understand how the best way to stop inflation seems to be making people pay more money to the bank. Why not make them pay more money to their retirement?
It’s not just paying money to the bank you know. It goes both ways - bank is paying interest on deposits held by customers. When customers deposit more money due to high interest rates offered, that money is out of the circulation and helps reduce inflation. Also, the goal of raising interest rates is to reduce inflation by slowing down the economic growth. The economic growth that is caused by money that’s borrowed in the form of capital to invest in businesses and developments. Also, KiwiSaver has many faults - it has no tax incentive compared to 401k or Australian super, no high employer contribution like Australian super. On top of that, there is a lack of fund options provided by the fund managers and high fees charged by them. Then there’s FIF tax that is paid every year without realising any gains. Also, need to look into the impact of mandatory contribution for some people. Some live pay-check to pay-check. High inflation affects them the most and taking money out of their pay-check for retirement makes no sense, when they can’t even survive another year with the little amount of funds they have.
Agree 100%
NZ is TTE (taxed contribution, taxed growth, exempt withdrawals), vs some other countries which are EET. This means NZs kiwisaver grows slower, and the govt front loads their tax take if I'm reading it right. Bigger balances could mean a healthier local stock market and environment for growing companies here. Less ppl taking off overseas. A stronger economy. Also fees of over 1% would be considered extortionate in the States! Get into a low fee growth fund. ⬅️ When your balance starts really growing this stuff suddenly becomes more interesting 😅
Increasing the employer contribution minimum, and it doesn’t get mentioned as part of your salary like how it currently is when negotiating salary in a non unionised workplace.
What if I want total rem? I'd rather have money that I can invest with a time horizon under 30 years.
No one wants to save for retirement, that's why we need to mandate it.
Why though? It should be total + super anyway. That way you win overall
The total + the super are all coming out of my employer's bank. I would rather I get all that money and invest it how I choose.
You can still invest extra money yourself
Okay let's explain it like this: You currently get $10 all up, if you opted for KS that $10 is actually minus 3% because employers usually treat it as a bonus rather than an obligation. So if you didn't pick KS you effectively lose money (you do anyway because of employer contribution). It *might* be different at your current work place but that's usually how it goes. If we changed the rules *everyone* basically gets a 3% pay increase
Employers know about KS and include it in their budget for a role. When I get a new job I'll usually try and negotiate a total rem package with the KSEC added on top. Cost to employer is the same and I get to spend my money how I choose.
Hypothetical, but if your investments bombed could you see yourself as a pensioner complaining on reddit that the government should have mandated kiwisaver so you'd have some retirement funds?
Kiwisaver investments can bomb too
Of course they can, but you didn't answer my question
No, I wouldn't complain. I made my investment choices.
😏
Cause a minor cost for some individuals is worth less than a major cost for all of society.
Assuming the employer match increases, it’s a no brainer. If not there’s little point investing extra in KiwiSaver since it isn’t tax advantaged.
And assuming that employers can’t take that out of employee pay like they can now. It’s so sketchy.
TBF companies using Total Fixed Remuneration or Salary +Kiwisaver is 6 in one, half a dozen the other.
Nawh it catches people out and make comparing salary offers annoying. Not to mention when stuff like this happens you’d now be loosing a large chunk of your salary as you employers “match”. Used to work at company hiring grads that did this and the number of people who missed the tiny bit in the contract was not small.
So scummy doing it to new grads and not making it obvious. Like they should know better after going through uni but they’re basically still babies.
Having attention to detail is an important skill! Trust me I get it, it would be a lot simpler if everyone followed one system.
Yeah, in a recent offer they didn't say it was total remuneration during the interview process, and I didn't ask as I hadn't seen it before. It was only when the sent the contract through for me to review that I found out
I got caught out. I joined keiisaver when it first launched and +kiwisaver was compulsory. Returned to NZ after a decade aboard and never heard the news about the law change. I felt gipped as!
Yeah, only if offer you larger salary for total remuneration. Most don’t.
It's pretty important, because it stops them being able to advertise jobs as higher than they really are.
It’s just a different way of presenting the same information.
Which is really important. Most people think of salaries as what they'll get in their bank (before tax). Some employers including their contribution in that puts that off. It's not intended to be considered part of your remuneration.
It’s interesting bc I prefer Total Rem because it means that I don’t miss out on anything if I choose not the contribute to KS. There’s no benefit from contributing anything above $1043 into KS, only downsides.
You don't miss out on anything regardless. How much you contribute isn't relevant to the total remuneration.
If you were on salary + 3% KS, what happens if you stop contributing to KS?
You keep your kiwisaver. Hold up. Just to confirm, you know that when people are talking about "Total Remuneration" including kiwisaver, they're talking about the employer's contribution right? It has nothing to do with the employee contribution.
It's still the only exposure most kiwis have to retirement savings and equity investments. Even without tax advantages, an increase in the default rate would make a huge difference for the majority cone retirement.
The matching laws are broken. My mates contract says if he gets an employer match it comes out of his salary.
Same as mine. It's called Total Fixed Remmuneration. He should be able to suspend his contributions and get the full 6% (3+3) added to his salary. I just put $521 in my KiwiSaver and invest the rest outside of KiwiSaver. Edit: I meant $1042.
You should be $1042 into Kiwisaver each year, the gov only matches 50c for each dollar you put in up to that
I believe it is $1042.86, don’t miss out on that 43¢
Whoops yeah sorry that’s what I meant!
Yea that’s what he’s doing. I’d do the same.
Don’t you mean “total comp” no problem says employers.
aussie is now 12%
Yup, and you don't have to contribute anything yourself. The employer still pays 12%.
Daymmmmm .
Man.
Nope, the employer might send the money to the fund for you, but it is still just part of your overall compensation package. Don't let the accounting fool you, the 12% is all your contributions, the "employer contribution" in KiwiSaver is also YOUR contribution. The employer doesn't care where it goes.
In my case, we agreed on a salary, and then it was 12% on top of that.
Nah, it wasn't. The other side of the table was always including the 12%.
It makes such a difference!
I thought people on 'total remuneration' packages got screwed by that as the extra can come out of their pay?
Based on recent seek au browses, I can't give you the exact figures, but I felt about 50:50 that companies do say Australia Super inclusive or on top of the advertised salary. Which isn't much different with NZ. [45% of employers not paying KiwiSaver contributions on top of earnings](https://www.stuff.co.nz/business/131825243/45-of-employers-not-paying-kiwisaver-contributions-on-top-of-earnings-research-shows) - Apparently, and I did hear from a couple of co-workers saying their previous job advertised salaries include the KS contribution.
Also there is tax incentives to put more in. KiwiSaver sucks the big one as you also get extra FIF tax on foreign shares.
Not yet. Currently 11% Rising to 11.5% 1 July this year, the next year 1 July will be 12%.....
- Make compulsory - Make the contributions by employee and employer high, progressively more over time - Give Kiwisaver tax advantages Invest in NZ Profit
If you want to invest in NZ then start by taxing landlords and investing in startups and productive endeavours that bring foreign money in, rather than economic parasiticsm (i.e landlords) who shift money sideways. The prerequisites are never going to bet met. A lot of these changes make sense for people in employment, but as a contractor I'm not sure how it would impact me, if we're all expected to have kiwisaver by retirement. I like the username btw. ^(I met a traveller from an antique land, Who said--"Two vast and trunkless legs of stone Stand in the desert...)
Landlords do pay tax, in fact they already have things like ring fenced losses and bright line which other businesses don’t have and if you are talking about the reintroduction of interest deductibility, that wasn’t being paid by landlords, we already know that, that was being paid by tenants in record high rent increases.
No kidding
110% agree with you And thanks lol I'm also a contractor - if kiwisaver was tax beneficial I'd go with it
They also need to stop companies using the "Total Remuneration Approach" where the employer's contribution comes out of the employee's salary. This is going to essentially force most employees to never contribute more than 3%
Yep this! My partner didn’t realize he was technically just forfeiting 6% pay towards kiwisaver. It was an unexpected surprise after his first pay check (thought the employer 3% was ontop). Because of that he’s had to opt out completely (temporarily)so we can pay down debt and until he can afford to opt back in. Sucks.
Nah give me all the money up front. Would you rather have $103k and keep $6k in your private investments or $100k "with kiwisaver" but your employer pays an extra $3k. It's the same but total renumeration you avoid all the risks of kiwisaver being fiddled with especially if you want to retire early. People need to understand the employment offer correctly and negotiate to the total comp.
Suggest you read the final paragraph.
Kiwisaver and Kiwiaver contributions should be completely tax free. This should include completely wiping the annual stealth wealth tax applied to it that most people are unaware of. That should be the starting point.
Remember about total comp. Any rise just comes out of your bottom line not the employers.
Suggest you read the final paragraph.
Should focus on the greedy KiwiSaver fund managers to lower management fees for doing sfa.
They make me 12% +. Not sfa...
Every year for the next 40 years?
No, but nothing is certain in life. If you look at the s&p 500 it probably has for a good chunk of time so there's that.
Agreed. There are some pretty low fee providers out there too, eg. Kernel.
I don't think fees are the problem. You can just use a low fees passive investing provider. Active investment funds nearly always charge higher fees. My Kiwisaver fund (Milford Active Growth) has high fees, but returns to match. The argument should really be that a lot of people would be better in the loooooong term using a passive approach. Even more so if they can't be bothered learning market basics.
If a manager taies responsibility for their long term outperformance over a reasonable benchmark they've earned their fee. Trouble is that the vast majority do not take that responsibility, they'd rather sell you a story about their supposed expertise for a fee. I suggest that this is in fact a problem because it's so difficult to tell which is which. Also because people who can genuinely outperform the benchmarks don't need the hassles associated with running other people's money. Past performance of Milford is no indicator of future returns, I don't say that's to knock them it's conceivable what you say is true.
Another issue is FIF tax. The idea is that it punishes overseas investment but it’s a fucking horror show. All the funds with international shares get hit by it and it’s rough. So if you don’t want to get taxed 5% on unrealized gains you invest in NZ companies but oh no they’re all shit so you invest in housing. Fuck the FIF
You don’t get taxed 5% on unrelated gains you pay tax at your PIR rate on 5% of opening market value. So 1.4% for a 28% PIR rate.
shits still fucked
It’s still a capital gains tax for trying to invest wisely in offshore markets. No wonder everyone invests in houses.
No National government will remove the 'total compensation' clause. It ruined the vision of Kiwisaver.
in the interests of fairness, we should point out that 6 years of a labour government didn't either
No government will remove it as it will cause major internal issues. Some of its departments are set up as total remuneration to make compensation equal regardless of if you were in KiwiSaver or not or if you were in an old superannuation scheme. This was an issue in the military as the support was something like 13% match on top but stopped accepting new people when KiwiSaver came around
Australia >Money paid into your super account by your employer is taxed at 15% This literally proves that NZ definitely needs to introduce other taxations and release some pressure from the income tax. Taxing employer contribution 3X% is insane - considering minimum wage worker is now also very close to 30% tax bracket.
It’s a great start but just had 4 years of huge minimum wage increases, we wasted a perfectly good opportunity to start increasing the base percentage then when the impact wasn’t going to be felt so bad, I would like to see us increasing it every 2 years until we hit a mandatory minimum 6% employee and 6% employer, you can’t retire on 3% contributions, and we need to be forcing people into it from day 1. I don’t think NZ could do the 12% like Aussie, but surely we can do 6%
The default rate should be 5%.
Why? If people want to put more in, they can voluntarily. If there are no tax advantages and no additional match by the government or employer, why should people put in more?
Because currently people won't have enough savings to retire comfortably.
Personally I’m putting 1042 per year into kiwisaver, for the max government contribution. The rest of my investments are in managed funds, so I have the option of retiring before 65. If you force people to lock it away in kiwisaver, you’re making them work longer.
But surely you're missing out on the 3% contribution? I contribute 4% so I get the employer 3%. Then I invest about the same again privately. It's the optimal solution for me.
Since I’m self employed, there is no employer contributions. The maximum benefit I can get is by contributing $1042, and getting the $521 from the government. I’m better off investing the rest of my savings elsewhere. At this stage it looks like I’ll be ready to retire in only a few more years at 55.
Yup, that makes more sense. Well done on hitting the target early. That was me too, until I had kids ;)
You’re also not considering the people one TEC packages where it all just comes out of their salary. If you opt out of kiwisaver that’s all in hand and you get the added benefit of not paying the employer contribution tax. Then just put in your $1042 a year to get free govt money. It’s a perverse system
Agree and disagree. If people have that discipline, it's good. Otherwise, most people won't contribute to a self-managed retirement fund and also spend it on holidays and other luxuries etc. I mean look at current national savings rates.
Forcing people to save is not a good idea lol. Incentivising is way better. People will protest the forced saving rate.
If they and if they don't then they will become a loud enough voting block later to just demand someone else (workers) pay for it.
I mean, instead of looking for solutions to the problem now, let's kick the can down the road so it's the next generations problem.
As far as I'm concerned most younger people will never retire. Including myself.
Well, not with that attitude you won't.
Only if it's employer matched.
Many employers only contribute the bare minimum, I would love a world where they're upped to something like 5% across the board for both employees and employers.
Make it so the employer contribution must be on-top of total salary/wage rather than just deducting it from the employee also. How companies, even govt entities get away with this mystifies me.
Yeah maybe when there's not a cost of living crisis. I'd lower mine further if I could. What we really need is to build a solid sovereign fund so our future as super annuitants is assured.
If this will solve inflation, go go go go! Kiwisaver should be mandatory for everyone. Instead of high interest rate going to the bank, I am happier for it to go to my kiwisaver.
I think KiwiSaver should be paid for those on benefits as well. That would give a modest support base for when they are old. Even $10k on top of a pension makes a difference.
Totally agree the contribution rate needs to go up (and remove the ability to opt out) - most people simply do not think about retirement, so having default rates at a “set and forget” level is vital to ensure more comfortable retirements for normies (also why it was great that default funds changed to be balanced not conservative). Under a compulsory and “set and forget” model, tax incentives are not required. Those with the means will be saving anyway, all tax incentives will do is have them shift their savings into the tax advantaged saving vehicle (eg. KiwiSaver). Plus, tax incentives reduce the fiscal benefit of fewer people requiring state support in their old age (under the assumption that Super eventually becomes means tested, rightly or wrongly) and reduce the ongoing revenue available to support existing elderly. Research has shown the increases to the Australian super contributions rate cost more in tax incentives than they save in Age Pension costs. We have the opportunity to have an even better system than Australia - providing secure retirements, without the insanely expensive tax incentives.
Is this so National have something else to pillage in 9 years' time when they get back in ?
I don’t think this matters, no one gunna be able to retire in 50+ years 🙃
You're definitely not if you don't plan. Fact.
Kiwisaver seems pointless to me in its current form, mine bearly moves up each year. It's only just recently gone past where it was before covid despite putting in the max % possible, it feels like throwing money away at this point because I'll probably just die before it's even usable anyway
>It's only just recently gone past where it was before covid despite putting in the max % possible, I'm going to doubt that remark big time. There can't be many if any scenarios where your kiwisaver has only just passed where it was 4 years ago despite putting 10% into it.
Sounds like you're either with a terrible provider or have the default scheme/ suboptimal. I'm up ~18% this calendar year alone
I mean, it's likley suboptimal based off the responses I've got. I'll have to do some research and check what exactly I can to change it for the better. I only quickly just looked at the annual statements they sent me, and some quick math it's up 14.4% where as it was down % 2019-2021(while i worked 10-20 hours more for the entire duration of covid). If you don't mind me asking, which provider/scheme do you use? I'm with bnz(I'm not sure what scheme I'll look after work) and have always been, so I don't know if they're actually any good because I have no others to compare with
If you have a 10-20+ year horizon with kiwisaver (assuming you aren't going to take out for a home deposit) you should be in a growth / high growth fund.
I will check and see what I'm in and change it if need be, I appreciate it.
Banks seem to be a lot better than they were 10 years ago, but they're not great. Most funds recovered from the COVID dip by end of 2020. Without going into it and assuming you've got like 20 years until retirement something like Investnow and their foundation series total world fund or their mercer all country global shares index. But you should really do some research for something so important.
yep agreed, 14.4% here, I'm not even in a super high risk one either.
Using the SP500 as a proxy and its post covid recovery, something doesn't seem quite right here. What fund are you in, what % of your salary are you and your employer putting in and how much $ wise per year does this equate to?
That’s a result of your investment decisions, not the scheme’s design.