News & Views
KiwiSaver is upon us from 1st July 2007 and is something that when you join your NZ employer, you will be offered. It is a retirement savings scheme where you can pay into it either 4% or 8% of earnings. Is it worth joining?
In general the answer would be yes as recent amendments to the rules means that so long as the employee is paying into the scheme, employers will from April 2008 have to start contributing as well and after four years will be paying in up to 4% of your earnings on your behalf.
In addition the NZ government will also provide tax incentives of up to $1,040pa so in return for paying a relatively small percentage of your earnings into a KiwiSaver scheme, you will get a significant extra amount paid in on your behalf. The NZ government will also make a lump sum payment of $1,000 into each scheme set up and will subsidize fees up to a $40pa.
Therefore from a growth point of view it is certainly worth joining. You should however also consider potential pitfalls so as to form a balanced view. Monies will be tied in until you reach state retirement age (at present this is 65 but like in the UK this could rise in future). You should also note that unlike in a Superannuation Scheme, which is held in trust, your money is not protected should the provider go out of business so it is important that you choose a solid provider who is likely to be around in the long term.
For further information on KiwiSaver visit www.kiwisaver.govt.nz
