KiwiSaver at work: do you know your rights?

With tens of billions saved and three million members, KiwiSaver is helping an increasing number of people buy their first home and fund their retirement years.

But how well do you know your rights? Here’s what you need to know about KiwiSaver at work.

You have choices

All employers have a ‘default’ KiwiSaver provider, for those employees who are automatically enrolled to join and don’t nominate a provider. However, even if you have been opted in, you can switch providers: you don’t need to stick with the provider your employer has chosen for you.

Making an active choice of fund is one of the best ways to ensure the fund you’re in matches up with your attitude to risk and your goals.

You can opt out

If you have been automatically enrolled into KiwiSaver, you can choose to opt out, between two weeks and eight weeks of employment, or in some other situations.

But before you do, make sure you know what you’re leaving. For example, your employer won’t be making their 3% contribution, and they are not required to pay this to you instead of KiwiSaver, if you choose to opt out of the scheme.

Employment status

Are you a contractor? Keep in mind that your employer doesn’t have to contribute, even if you are making KiwiSaver payments yourself. Employers are actually only required to make KiwiSaver contributions for employee members.

You can increase your contributions

You don’t have to stick with the minimum, employer-equalled contribution of 3%. You could also increase your regular contribution to 4%, 6%, 8%, 10% or 12% or even make additional lump sum payments.

And remember, if you increase your contribution, your employer is only required to make the current contribution of 3%.

Plus, just like the rest of your KiwiSaver savings, even voluntary contributions above the minimum are still ‘locked away’ until you reach the age of retirement or meet one of the other criteria for early withdrawals. This is something to consider when budgeting for extra contributions; would you be more comfortable putting extra money in a savings account, knowing you can access it at any time?

Total remuneration packages

Generally, employer KiwiSaver contributions need to be paid ‘on top’ of your gross wage or salary. You may be able to agree with your employer to a ‘total remuneration package’ – which means that the package itself may include the KiwiSaver contribution. For example, your total package is $51,500, but your actual gross salary may be $50,000 and $1,500 would be the KiwiSaver contribution.

However, all employees in New Zealand are entitled to a minimum wage; this means that KiwiSaver employer contributions can’t be part of a total remuneration package, if the employee’s hourly rate then becomes less than the minimum wage.

 

A last word – check your KiwiSaver account regularly, to make sure your deductions and your employer’s contributions are being paid regularly (it can take up to three months for deductions and contributions to show) – and if there is any discrepancy, contact Inland Revenue to make sure you are getting what you are entitled to.

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek financial advice.

Securing Insurance today or crowdfunding tomorrow?

With the rise of crowdfunding platforms like Givealittle or GoFundMe, helping out others in the community has never been easier.

So, it could be tempting to view fundraising as a substitute for Insurance. But remember: when it comes to protecting you and yours, Insurance can give you much-needed control in times of need. Here are some key reasons to consider it…

It’s about financial independence

We all know New Zealanders are a generous bunch, and they keep proving it over and over. But if something happened and you had the right cover in place, you wouldn’t need to rely on the kindness of others.

Taking steps to plan for the unexpected is about being financially independent, no matter what life throws at you.

You can get help when you need it

Having Insurance in place is also a matter of timing and certainty of funds. Relying on public donations can be quite risky – not only are you competing with other worthy causes, but you also risk not raising enough to fund what you need. And even if you manage to get enough, it may still be too late.

One example for all: Health Insurance

Sure, not all scenarios and unexpected events can be resolved by having Insurance in place, but a large number could. And these include the majority of financial losses.

Take Health Insurance, for example. Here in New Zealand, we have a great public health system and ACC for injuries, but as some stories on Givealittle testify, even the health system has some gaps. For example, our medical system can only provide drugs and treatments that are approved by Pharmac.

Unfortunately, Pharmac has a finite budget, and many potentially life-saving medications don’t make the cut every year. The good news is, some Health Insurance policies offer cover for non-Pharmac drugs – meaning you can have your treatment funded, even if it’s not covered through the public system.

 

When it comes to looking after yourself and your family, it pays to think ahead and prepare for the unexpected. If budget is a concern and would like to discuss your options, please get in touch: Insurance can be tailored to your needs, ensuring that you won’t be left hoping a fundraising campaign can help in a time of need.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

NZ life expectancy: what does it have to do with Insurance?

As time goes on, the average life expectancy of New Zealand’s population is increasing (according to the World Bank), with many of us living longer than before. The added time we have on Earth can impact our lives in plenty of ways – including our retirement savings, financial planning and Life Insurance.

To make sure you’ve got life covered, let’s take a look at how New Zealand’s life expectancy can affect your Insurance.

What are the stats?

The most recently-available data from the World Bank shows that New Zealand’s life expectancy from birth in 2015 was 79.73 years for males and 83.27 years for females. In addition, mortality rates are decreasing overall.

As a country, we’re also sitting slightly ahead of other developed nations like Australia (82.45), the UK (81.62) and the United States (78.74) – but just behind Japan at 83.84 years.

Healthy hints

Living to a ripe old age takes a mix of willpower, a healthy diet and good habits. We know that it’s important to exercise regularly and eat the right foods – but being healthy doesn’t just increase your chances of long life; letting go of harmful behaviours like smoking could lead to lower premiums on your next Insurance policy. And, if you’re going to be around a little longer, those savings could really come in handy.

What does this all mean for Life Insurance?

The longer we live, the more long-term affordability becomes important. That’s why it’s a good idea to aim for cover that isn’t just suitable for the needs you have today, but also sustainable in the long run.

One of the options to consider is Level-Premium Insurance. Unlike Stepped Premium Insurance, where premiums increase as you age, Level Premiums stay the same through the contract – they usually start higher than Stepped Premiums, but they can give you more certainty on cost and save you money over time.
If you’re looking to get your Life Insurance sorted, please don’t hesitate to get in touch. Every Insurance provider is different; as Insurance advisers, we can help you secure the right level of coverage, whether you live to 80 or 108.

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

Five Insurance extras to consider

Thinking of increasing your Insurance protection, or simply would like to know what’s available and how you can make the most of it?

Depending on the type of cover you have in place, there are certain extras you can consider. Here’s an outline of some handy optional benefits you can add to your policy, and of course, feel free to contact us if you’d like to go more in-depth about your options.

For Life Insurance

Does your policy have a funeral or bereavement benefit? Depending on the ownership structure of your Life Insurance, it may take some time for the funds to reach your family – just when they need it most.

A funeral or bereavement benefit option means that a lump sum can be deducted from your total insured amount and paid to your family a lot quicker. This gives them peace of mind that the costs of your funeral are covered, without having to wait.

For Health Insurance

Most Health Insurance plans offer a range of options; from basic surgical-only cover, to including doctors and dentists cover. Often when you need surgery, there will be tests and imaging that also need to be completed. If you haven’t included these options in your Health Insurance cover, you could find yourself out of pocket. Take some time to consider the various options available, and make sure you have included the ones that will give you the most benefit, at a cost that is reasonable to you.

For Income Protection

When you are off work, and no income is coming in, you are probably more worried about how you will meet your obligations than you are about continuing to save for your retirement. Adding on a retirement protection option to your Income Protection Insurance means that your current regular deductions will still be made, allowing you to focus on getting better rather than worrying about what a period of no income will do to your future.

Another useful option to consider is a waiver of premium benefit. This means that when you are on claim, any due Insurance premiums will be paid for by this additional option – giving you one less budget concern.

For Trauma Insurance

Trauma Insurance pays out a lump sum if you suffer one of the specified injuries or illnesses. Generally, it is designed to help you meet additional or extraordinary costs until you go back to work. However, what if you never go back to work as you have suffered a total and permanent disability (TPD)?

Having TPD cover as an optional extra on your Trauma cover could provide you with an additional lump sum, just when you need it most.

The bottom line? Review your cover regularly and always feel free to talk to us. We can help keep you informed about optional extras that may make your policy do more for you.

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

What happens when Pharmac doesn’t cover it?

There has been plenty of buzz in the media about Pharmac and unfunded cancer drugs – but what is it all about?

Read on for an outline of what Pharmac is, and how it works with our public healthcare system. And most importantly, what you can do to get affordable access to those treatments, whether they are publicly funded or not…

What is Pharmac and how does it work?

As you may know, Pharmac is a government agency that is responsible for deciding which medicines, vaccines and other treatments will be publicly funded in New Zealand. They also assess the continued performance of currently-funded pharmaceuticals. The agency has a finite budget every year, so its decisions are based on the recommendations of sub-committees and the results of clinical trials.

Unfortunately, this limited budget means that many potentially life-saving or life-extending drugs are not presently being funded, adding a financial burden to the emotional strain.

What does this mean for Kiwis?

Some ‘protest’ action has seen important treatments like Keytruda and Herceptin receive funding, but generally speaking, it’s best not to rely on Pharmac being able to amend its approved schedule – especially not at short notice.

We never plan on falling ill, but life has a way of making its own plans sometimes. If you find yourself in need of life-saving medication, but Pharmac doesn’t fund it, the alternative is to privately pay the costs of obtaining the treatment – often reaching thousands of dollars each month. For many New Zealanders, this just isn’t viable.

What can we do?

A good way to avoid possible heartache in the future is to sort out your ‘safety net’ today – the most effective of which is Health Insurance.

This Insurance type gives you the much-needed option of having private specialist/diagnostic treatments for an illness or condition, avoiding public hospital waiting lists. Plus, something you may not know, certain policies also cover the cost of non-Pharmac funded medicines.

This is a very important thing to consider when taking out Health cover. What would you do if you had to pay for treatment? And if you couldn’t afford it, could you afford to wait? This is where the right Health Insurance policy can make all the difference.

Remember: not all Insurance policies are equal, so if you’d like to talk about your needs and options, please get in touch. Finding the right cover could mean receiving the treatments you need when you need them, without the added worry of where the money is going to come from.

 

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser. 

‘Secrets’ of a successful Insurance claim

Time to make an Insurance claim? Getting in touch with us is always the first best step: we can help you through the process and let you know what you need to do.

But there are some other things you can do to help your chances of a successful claim. Read on for some key examples…

Complete the form in full

As your adviser, we are always here to help you with the paperwork. But if you have to complete any forms, make sure you give the Insurance provider all the information they need to assess your claim.

You need to answer every question on the claim form fully, or state why it is not relevant. Insurance providers use this information to decide if you have a valid claim, and therefore whether they will pay your claim. If you don’t provide all the information that is needed, it could delay your claim being approved, or even worse, it could be declined because you haven’t demonstrated a valid claim exists.

Read your Insurance policy

Not sure if you are covered? Once again, we are here to answer any questions you may have – big and small. In the meantime, taking a moment to read your policy is always a good idea (especially before submitting a claim).

Depending on the type of policy you have, some claim events might be excluded or only covered in certain circumstances. If you are unsure whether your event is covered, check with us: we can help you make sure you are following the provider’s claims process, submitting the claim to the right person or department.

Gather all the necessary details

While we work hard to take the hassle out of claim time, there are still things that only you can do.

Depending on the type of Insurance you have, for example, you may need to gather the evidence and write a complete account of what happened. The more information you can provide, the clearer everything is for your insurer – which may reduce the amount of time for your claim to be paid.

 

Accuracy is one of the secret ingredients of a successful Insurance claim, but with the amount of information you need to provide, claim time can be stressful. Our advice is: talk to us, as we can help you prepare and file your claim. Most importantly, we are an advocate for you, so if something is a bit ‘grey’ we can liaise with the Insurance provider on your behalf, for a hopefully successful outcome.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

Take control of your Insurance premiums in four steps

 

 

Like to keep your Insurance premiums as low as possible? While premiums usually increase with age, there are things you can actively do to reduce your premium costs – including choosing the right premium type.

Check out these four steps to be in control of your finances.

 

Building healthy long-term habits

Positive things like quitting cigarettes or reducing drinking can go a long way in keeping your premiums as low as possible.

Insurance premiums have ‘loadings’ when there are certain lifestyle risk factors present. For example, smokers automatically have a 100% loading, meaning premium costs (for the same level of cover and same age) are double what non-smokers’ are.

Even if you consider yourself more of a ‘social’ smoker, keep in mind that you are still considered a smoker for the purposes of calculating your premium. If you’d like to keep your health and bank account a break, consider kicking the habit completely.

Like smoking, excessive alcohol consumption can also cause some significant health issues, which means a loading may be added. If your level of regular drinking exceeds recommended weekly limits, an additional premium may be charged because of the higher risk of a future claim. By keeping your alcohol consumption within recommended limits, you may be able to reduce the costs of your premium.

Having a rainy-day fund

Have a good savings habit and your own emergency fund in place? Your savings could save you premium costs as well.

Premiums are based on the level of cover you need, and some covers also have an excess or a wait period before the cover starts being paid out. The longer the wait period and the higher the excess you select, the lower the premium. So if your rainy-day fund is enough to cover the excess or your living costs during your wait period, this can be a good way to save money.

Dangerous hobbies

Dangerous hobbies – or at least ones with a higher chance of causing injury or worse – are likely to attract a higher premium, if cover is accepted.

Perhaps you enjoy hang-gliding, scuba diving or the odd spot of rock climbing – and we are certainly not suggesting you should stop. But keep in mind that, if you want cover for potential loss caused by these activities, you will usually need to pay a higher premium for the higher risk. You can lower your premium by either giving up the hazardous activity or having cover for the activity excluded from your policy.

Choosing the right premium type

Usually, Insurance premiums increase with age, and that’s what we call ‘stepped premiums’ or ‘rate-for-age premiums’: the vast majority of Insurance policies in New Zealand fall into this category.

But there’s another premium type, which remains the same throughout the term of your policy: we are talking about ‘level premiums’.

Unlike stepped premiums, which are cheaper initially but get more and more expensive in the future, level premiums are consistent over time so you can avoid the additional cost later in life (when you’re more likely to claim). In other words, you may have the option to fix the cost and secure the long-term affordability of your cover.

 

Like to learn more about level premiums or want to discuss other ways to keep your premiums manageable? Please get in touch. You have got some control over your Insurance premiums, and by making key changes, you may be able to reduce costs.

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

Want to know where your KiwiSaver fund is invested?

 

Not all KiwiSaver funds are created equal – different fund types invest money in different ways.

Whether you already belong to KiwiSaver and would like to check whether your fund is aligned with your investment profile, or you’re exploring your KiwiSaver options for the first time, this read is for you. Here we look at the asset allocation and approximate time horizon for four common fund types: defensive, capital stable, balanced, and growth funds.

 

Defensive funds

Defensive funds are mainly invested in bank deposits and other fixed-KiwiSaverinterest investments, with up to 10% invested in growth assets (shares and property).

Generally speaking, if you are planning to use the funds within three years, a defensive fund may be a good option. This type of fund is designed to provide the minimum possible risk, but keep in mind that returns aren’t likely to be much higher than a bank term deposit.

Conservative funds

Compared to defensive funds, the conservative type usually has a higher percentage of growth assets – about 25% of the overall asset allocation will be in growth assets.

If you are relying on returns from the fund to subsidise other income, such as NZ Super, or have a short investment horizon, this type of fund may be suited for you. While protecting the amount invested is more of a priority than getting fast returns, a conservative fund should provide relatively stable returns, with a low probability of a negative return over a year.

Balanced funds

As the name suggests, balanced funds have a relatively even spread of growth assets and fixed-income assets (cash and bonds).

The spread generally ranges being between 40% and 60% invested in growth assets, depending on what the fund managers decide is best for the portfolio.

Generally speaking, this fund is designed for longer-term investors, who want some capital protection but have time to bounce back from any capital losses. Balanced funds aim to achieve a return higher than a bank deposit, so the fund is about growth, rather than income.

Growth funds

Focusing on growth rather than income, growth funds have a wider spread of positive and negative returns but are likely to prove higher returns than the other fund types.

The asset allocation includes more growth (shares) assets than income assets, so growth fund balances are likely to fluctuate a lot more than more conservative funds. For this reason, growth funds are best suited for investors who can take more risk with their investment – either because they have a long investment time frame (for example, more than 10 years), or they have other financial means to help them withstand losses.

About ethical investing

Ever heard of ethical investing? The level of risk may not be the only key component of your investment decision – you might also like to feel good knowing your money is invested ethically.

Ethical investing is about seeking a good financial return while avoiding companies that don’t match your values. For example, you may not want to support companies involved in gambling, tobacco, weapons, or those with poor environmental or human rights records.

The decision comes down to your personal beliefs, and you should be able to find ethically invested funds across all fund types – so you can invest according to your attitude to risk, with the added benefits of social responsibility.

 

Like to make sure that your KiwiSaver fund is right for you? With so many different options, it’s important to understand your investment profile before making any decisions – and that’s something we can help you with. Always feel free to contact us if you have any questions.

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from an appropriately qualified financial adviser.

Debunking five KiwiSaver myths

Five KiwiSaver myths

There are many myths and misconceptions about KiwiSaver, and the advantages and disadvantages of being a member. Here, we debunk five of the common misperceptions we hear.

I can only join KiwiSaver if I am a PAYE employee

Being a contributing member is probably easier if you are a PAYE employee, as your employer makes the deductions and pays them to IRD. However, even if you are self-employed or on a benefit, you can still join and contribute to KiwiSaver. You will just need to decide how much you want to contribute and then make the payments manually yourself.

And another tip – the Government will contribute an additional fifty cents for every dollar you put in up to a maximum of $521.43. Yes, that’s like free money.

Retirement is ages away: there’s no point having KiwiSaver until I am older

Remember: the earlier you start saving, the more money you will have in retirement – and you will need to save less on a regular basis to achieve your retirement goals.

If you start young, a small amount eventually turns into a big amount with the addition of compounding interest and the longer period of contributions. The later you leave it, the bigger your regular contribution will need to be, to make up for all the years you weren’t putting money aside and weren’t getting the benefit of compound interest.

I have to go with the KiwiSaver provider my employer has selected

While all employers need to select a default provider, you have the freedom to choose the provider you want – you don’t need to be stuck in a default scheme.

I can only access the money when I turn 65

Well, actually, the full access is only when you reach retirement age – which may or may not still be 65 in a few years’ time. However, you can access the funds for a first-home deposit (subject to meeting the criteria) or if you are experiencing hardship (subject to approval).

I don’t earn much, so there’s no point in having KiwiSaver

Even putting away as little as $10 per week can give you a nice little nest egg when you retire. If you started at age 20, and put $10 per week aside, by the time you were 65 you would have $23,400 – without any interest/gains or Government contribution. Factoring in interest and compound interest could see that at over $100,000!

 

KiwiSaver is designed as a long-term retirement savings plan. By starting contributions early, and choosing the right fund and provider, your retirement can be a lot more comfortable and enjoyable.

 

**This is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser. Please note past performance is not a guarantee of future performance.

An Adviser Disclosure Statement is available free and upon request. 

Seven good times to review your Insurance

Seven good times to review your Insurance

Life always moves fast and forward. It’s a string of choices and change, all of which could affect your protection needs.

To simplify things a little, we’ve narrowed down the list to seven key life events that may trigger the need to review your Insurance. Read on, and if you’ve hit any of these milestones since your last review, please consider giving your policies a check-up.

Having a baby

Starting a family is one of the most life-changing experiences you can have. And before a new baby arrives, it’s a good idea to update your existing policies or secure new ones.

As a parent, your family’s wellbeing is your number-one concern, and depending on your situation certain types of covers may be more appropriate than others, including Life and Health Insurance. If you need help finding the right fit for your circumstances, please get in touch with us.

Purchasing a house

Home-ownership is the quintessential Kiwi dream, and something that you’ve worked so hard for is worth protecting.

Keep in mind that a mortgage is a long-term financial commitment, and a lot can happen in between. If you lost the ability to earn an income, or worse, could your family handle mortgage repayments? Having a plan for the unexpected can make all the difference.

Paying off debt

As we’ve just seen, taking on debt is a good reason to consider increasing your cover. But keep in mind that the opposite scenario is also true.

So what if you manage to reduce your debt or pay off a big chunk of it – for example, your entire loan? Well, that’s a perfect time to celebrate and reassess your Insurance needs. Is your level of coverage too high now? Can you tune it down and save yourself some money?

Getting a new job

Have you recently landed a new job? If so, your income may have changed too, and it might be worth checking if your Insurance plan is still affordable or appropriate to your needs.

Plus, if you had a pay rise, why not look at increasing your level of coverage? Have you ever considered Income Protection or Trauma?

Getting married or separating

When your relationship status changes, so do your financial situation and Insurance needs. If you want to make sure that your protection has you covered, it’s important to update your cover.

Starting a business

Your business is more than just a simple job: it’s your creation. But as you know, launching your own venture also comes with a few additional expenses and risks. Once again, anything can happen, and protecting your ability to pay off debt is critical.

Like to explore your Business Insurance options? Please don’t hesitate to reach out to us.

Becoming empty-nesters

Being a parent is a job you never stop doing, no matter how independent your kids are. But besides the emotional aspect, there’s also a financial side to this transition.

If your children have left home and are standing on their own feet, take the time to check whether you still have the right level of cover in place – not too high and not too low, just right.

 

Do any of these life events sound familiar to you? Please feel free to contact us: we’d be happy to guide you through your options. And remember: conducting regular reviews is one of the best ways to fine-tune your Insurance and make it suit your ever-changing needs.

An Adviser Disclosure Statement is available free and upon request.