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Get your KiwiSaver decision sorted

Monday, April 6, 2009
Deciding whether or not to join KiwiSaver and boost your superannuation?
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One of the things on the minds of many New Zealand workers will be deciding whether or not to join KiwiSaver.

You've probably heard about government incentives such as the $1000 kick-start to your savings, and the maximum $1042 annual "tax credits". But there are also the employer contributions to consider.

Every time you're paid super, either 2, 4 or 8 percent (you select the amount), of your before-tax pay will be automatically deducted from your take-home pay and sent to your KiwiSaver account.

Your employer now has to match your contributions to KiwiSaver, at a minimum of 2 percent of your pay. Your employer may also contribute more than this amount.

If you can afford it, and you don't mind the funds being locked in until you're 65, or older, then KiwiSaver could provide an easy and affordable way to save for your retirement. Keep in mind that KiwiSaver won't suit everyone. There are other savings options that may be more flexible and work better for you.

If you do decide to join KiwiSaver, another decision you will need to make is where your money is invested.

If you prefer, you can choose the provider your KiwiSaver funds are sent to and the type of investment option for your savings. If you would rather not choose, your employer may have a preferred provider they'll send the money to, or the government will select one for you.

To help New Zealanders with the complicated task of working out which KiwiSaver fund is most suitable for them, a KiwiSaver fees calculator is available on Sorted. This provides an independent estimate of KiwiSaver fees to help you make a more informed decision regarding which KiwiSaver provider and fund to choose.

Note that it is important to not look at estimated fees in isolation when choosing a KiwiSaver provider. The level of risk (and associated return), service level and communication offered by the fund provider should also be considered.

SortedArticle provided by The Retirement Commission's free and independent website is packed with helpful information, tools and calculators to help you manage your personal finances.