Annual review: have a date night with your KiwiSaver
Written: 04 May 2022
Author: Jono O'Grady
4 min read
As another financial year ending 30 June looms, we’re reaching out to give you a heads up to check in with your KiwiSaver.
Although Flint doesn’t offer KiwiSaver funds on Flint, we think now is a good time to reach out and provide some thoughts on KiwiSaver. Increasing financial literacy is important to us, and we think that enabling New Zealanders to understand their KiwiSaver is an important part of this.
Flint is a platform for investing in managed funds, and we remind people that if they have a KiwiSaver account, then they are already an investor in a managed fund. While we don’t offer KiwiSaver funds yet, there is a lot that can be learned from KiwiSaver habits when it comes to investing. If you’re interested in how to apply KiwiSaver habits to investing on Flint, then here’s an article that you may be interested in.
We’ve heard that having a date night with your KiwiSaver can be a good idea. Ok, we’re being a bit flippant, but we’d encourage you to set an evening aside in June to assess where your KiwiSaver is at and make any changes which are necessary.
Many people have a set-and-forget mindset when it comes to KiwiSaver and to some degree this is a good thing. Aside from first home buyers who may want to draw down their KiwiSaver to purchase a house, many people are in KiwiSaver with a long-time horizon. KiwiSaver, then is something which should simply tick away in the background. For some people KiwiSaver can be a black box. Lifting the lid can be daunting, but answering the following questions may make this process a little easier:
- Are you eligible for the Government contribution?
- How’s your KiwiSaver performing?
- What provider are you using?
- What KiwiSaver fund are you in?
- What contribution are you making?
Are you eligible for the Government contribution?
One of the great things about KiwiSaver is the contribution that the New Zealand Government may make to your fund. We suggest checking through the eligibility criteria below and understanding if you are eligible for this Government contribution. Depending on your circumstances you may wish to top up your KiwiSaver account to gain the Government contribution. The IRD says the following about this Government contribution:
‘Each year, the Government will contribute up to $521.43 towards your retirement savings. You do not need to do anything to claim this contribution because your KiwiSaver provider will do this for you.’
The eligibility criteria to receive this, and how much you need to put into your KiwiSaver to gain this contribution can be found here.
How’s your KiwiSaver performing?
If you are in a KiwiSaver fund, you may have noticed some ups and downs in your balance so far in 2022. The market is experiencing some volatility, and the thing to remember is that this is perfectly normal when investing. If you want some thoughts on how to keep calm during times of market volatility, then you may find our article on market volatility helpful. Many people are investing in KiwiSaver for the long-term and as long as you are in the right fund, we’d encourage you to keep calm and carry on!
What provider are you using?
A lot of people end up in a default KiwiSaver fund when they start new employment, so don’t know who their provider is. If this is you there’s no shame in this, but we’d encourage you to find out who your provider is. One way is to talk to your payroll contact. Another easy way to do this will be to log in to My IR, the login portal for the IRD website. The IRD have made a lot of changes over the past few years and the portal is easy to navigate. Your KiwiSaver fund will be listed there, and you can read up on information on your KiwiSaver provider.
The next logical question is, ‘are they the right provider for you?’ This question is partly tied to, ‘what KiwiSaver funds do they offer?’ which we’ll tackle next. When evaluating which provider to join, remain with or switch to, rationale can differ across individual investors.
Some may feel comfort in knowing that their provider is a ‘default’ provider, and that the Government regularly reviews who these providers should be. The last changes came into effect on 01 December 2021, and you can read the list of default providers here. There are, however, many reputable providers offering KiwiSaver funds, and there is a lot of choice in the market. Another aspect that some investors may consider is whether the manager aligns to their values. How do they do business, and is this someone you want managing your money? If this is important to you, then websites like Mindful Money or Sorted can be a helpful starting point in your search.
There are multiple reasons as to which provider you choose - we’re not here to provide advice on this decision, but we encourage you to be informed about who our provider is and do some due diligence to see if they are a good fit for you.
What KiwiSaver fund are you in?
KiwiSaver funds come in many different flavours and are suited to different types of investors. KiwiSaver funds are usually categorised by the following labels: Defensive, Conservative, Balanced, Growth, and sometime Aggressive. Which fund is most suited to you depends on a number of factors including your age, income level and when you are planning on using your money. Flint highly recommends jumping onto the Sorted website at this point and using their KiwiSaver calculator to determine which fund you may want to be in.
What contribution are you making?
You may know this already, but one of the significant benefits of KiwiSaver is how easy it can be to make contributions on a regular basis. You can contribute through your salary and wage deductions, through a direct payment to the IRD or through a payment to your scheme provider.
We appreciate that some people are self-employed and so may not have the ability to ‘set and forget’ their contributions through wage deductions. For people who are self-employed, consider how much you want to contribute to KiwiSaver and when you want to make these contributions. Drip feeding into your KiwiSaver can enable your investment amount to compound over time and so can be a great way to contribute.
Mary Holm says the following about the self-employed and KiwiSaver:
‘Getting the government contribution is the best start. To get that $1043 in there, it’s much easier for people to put in $87 a month, or $20 a week, than finding $1043 once a year. But $87 a month isn’t that big a deal for a lot of people, and when you’ve got it set up, you can kind of just forget about it.’
Alternatively, you may wish to make a lump sum contribution on a regular basis. For people who contribute through salary or wage deductions, check in to see what your current contribution level is.
KiwiSaver is a core part of enabling bright financial futures for New Zealanders across all walks of life. Set an evening aside, have a date night with your KiwiSaver, and think through any changes you may wish to make. If you’re eligible for the Government contribution, then consider any contributions you may wish to make in June to receive the government amount this financial year.
And once you’re done assessing your KiwiSaver, we’d encourage you to think wider about your financial goals and where else you may like to invest. Many KiwiSaver providers have other managed funds available on Flint – take a look!
IMPORTANT NOTICE AND DISCLAIMER:
All content shared is of a general nature, current to the time it was penned, and is not financial advice. Before making any investment decisions, please be sure you have completed full due diligence. This should include reading the product disclosure statement (PDS), considering fees and taxation, identifying your time horizons, and understanding the performance history and reputation of the investments you are considering.
Please note: When investing you are not guaranteed to make money (and on occasion you may lose some or all of the money you began with). Seek independent advice to establish if an investment is suitable for your financial situation and long-term wealth generation goals.