Retirement

Enter KiwiSaver Survey and Win Prizes

Shai Patel

 

Click the link below to ask yourself 4 simple questions about the key benefits of KiwiSaver.

There’s a lot more to it than people think! Most of our clients get these questions wrong…

Enter KiwiSaver Survey

If you complete your details at the end, you will go in the draw for a $4,000 House of Travel Voucher or one of ten $100 GrabOne Vouchers.

I offer a 30 min free advice session for anyone wanting to learn how to make the most of their KiwiSaver savings.

Get in touch today by emailing or, phoning me on 09 551 3500 and we can set up an appointment.

Please note: The prize draw T&Cs along with a copy of the Product Disclosure Statement can be found at generatekiwisaver.co.nz

Are You Maximising Your KiwiSaver? – Make sure you do by 30th June 2017!

Shai Patel

I wanted to make you aware of Member Tax Credits for KiwiSaver that you are able to claim.

There were just under 580,000 eligible KiwiSaver members who received no contribution from the Government in their accounts in the 2016 financial year. That’s up from 573,000 the year before, 517,000 a year earlier and 466,000 in the 2012/2013 year. – Why let the Government keep money that is entitled to you!!

The Government contribution to your KiwiSaver savings is worth up to a maximum of $521.43 – but to get the full amount, you need to have contributed at least $1042.86 by 30 June 2017.

The Government pays 50 cents for every $1 you contribute, the maximum will be $521.43, so therefore you need to contribute $1042.86 to maximise the tax credit

If  you are 18 or over, working, self-employed or not working, you can get these tax credits as long as you contribute $1,042.86 for the year. 

You can check your KiwiSaver contributions online with most providers and see if you have contributed at least $1,042.86.

You DO NOT have to contribute if you do not wish to or you can contribute what is affordable in order to get at least some of the $521. (So for example if you contributed $500 you would receive $250 tax credit).

We can show you ways to make this easier over the course of the year and plan it so that you are maximising the benefits of KiwiSaver.

If you have any questions, then please feel free to contact me on 09 551 3500 or email info@insurenz.co.nz.

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Reserve Bank delivers cash rate call

Shai Patel

The Reserve Bank of New Zealand (RBNZ) has this morning left the official cash rate unchanged at 1.75%. 

Governor Graeme Wheeler said in a statement, “House price inflation has moderated further, especially in Auckland. The slowing in house price inflation partly reflects loan-to-value ratio restrictions and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the continuing imbalance between supply and demand.

“Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.”

Canstar general manager Jose George said it is an uncertain environment for home owners and warned on the increasing pressure for mortgage holders.

“As recent statistics show, while house prices have started cooling in  Auckland and other larger cities, mortgage rates are starting to trend upwards,” said George.

“Independent of OCR, the costs of servicing a mortgage are rising. Couple this with rising inflation and the flow-on effect this could have on other living costs, you have a situation where an already stretched household budget will not be able to take the added pressure for most NZers.

“For savers the situation is more positive.  Despite a series of drops in OCR, term deposit rates have remained largely untouched over the last 12 months or so. We are now starting to see increases in deposit rates, reinforcing the belief that banks are keen to grow their existing domestic deposit book.

The full statement by Reserve Bank Governor Graeme Wheeler is below:
Global economic growth has increased and become more broad-based over recent months. However, major challenges remain with on-going surplus capacity and extensive political uncertainty.

Stronger global demand has helped to raise commodity prices over the past year, which has led to some increase in headline inflation across New Zealand’s trading partners. However, the level of core inflation has generally remained low. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.

The trade-weighted exchange rate has fallen by around 5 percent since February, partly in response to global developments and reduced interest rate differentials. This is encouraging and, if sustained, will help to rebalance the growth outlook towards the tradables sector.

GDP growth in the second half of 2016 was weaker than expected. Nevertheless, the growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity.

House price inflation has moderated further, especially in Auckland. The slowing in house price inflation partly reflects loan-to-value ratio restrictions and tighter lending conditions. This moderation is projected to continue, although there is a risk of resurgence given the continuing imbalance between supply and demand.

The increase in headline inflation in the March quarter was mainly due to higher tradables inflation, particularly petrol and food prices. These effects are temporary and may lead to some variability in headline inflation over the year ahead. Non-tradables and wage inflation remain moderate but are expected to increase gradually. This will bring future headline inflation to the midpoint of the target band over the medium term. Longer-term inflation expectations remain well-anchored at around 2 percent.

Developments since the February Monetary Policy Statement on balance are considered to be neutral for the stance of monetary policy.

Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.

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Why Review your KiwiSaver?

Shai Patel

It is becoming more and more important for you to review your KiwiSaver and see how it is tracking to enable you to have the best retirement.

People are seeing their balances grow each year they are in KiwiSaver. Many people have a substantial amount to now consider KiwiSaver as an investment that will make a difference at retirement.

Please click here for reasons to be looking at your KiwiSaver.

NZ superannuation changes: what they mean for you

Shai Patel

Prime Minister Bill English announced that the age of eligibility will rise from 65 to 67, in gradual steps, from 2037.

The changes will be phased in from July 2037 and will not affect anyone born before July 1972.

The age of eligibility will increase six months each year from July 1, 2037, until it reaches 67 on July 1, 2040.

What does that mean for you?

Will the Super changes affect me?
If you are born on or after July 1, 1972, yes. You will have to wait until you are 67 to get your pension. But you will still be able to access your Kiwisaver at 65.

What if I’m born on June 30, 1972, or earlier?
Nothing will change. You will still get NZ Super when you turn 65.

What if I’m an immigrant?
If you’re a resident or citizen in New Zealand now, nothing will change. You will still get Super if you live in NZ for 10 years (five of those years after 50).
If you arrive after the law is changed (possibly next year), you will have to live in NZ for 20 years to get Super, five of them over the age of 50.

Will I still get my SuperGold card at 65?
Not once the retirement age is lifted. The age for a SuperGold will go up to 67 too.

Will the payments change?
No. they will remain at 66 per cent of the average wage (currently $335.50/week per person for a married couple or $443.50/week for a single person living alone)

What if I’m rich? Will Super be means-tested?
No. There are no plans for asset testing or income testing.

What are the expected cost of Super in the future?

With 1.1 million people expected to be retired in 2030 the forecast cost would rise to $20 billion a year equivalent to 6.2 per cent of the country’s output (GDP) against $11b a year and 4.8 per cent now.

The changes would lower the cost by 0.6 per cent of GDP – from 7.2 to 6.6 per cent of GDP – in 2045.

How does it compare with other countries?

Australia is at 65 now, rising to 67 by 2023.

Britain is 65 now rising to 67 in 2028 and to 68 at a later date.

The United States is 66 now rising to 67 in 2027.

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Government may scrap KiwiSaver ‘holiday’

Shai Patel

The Government is considering changing regulations around KiwiSaver holidays after calls from retirement chiefs to tighten the rules.

The Commission for Financial Capability wants five-year payment breaks scrapped with payment breaks rolled over one year at a time.

It also wants the word “holiday” replaced with “suspension” because it fears the word holiday sounds too upbeat and may be encouraging savers to think of it as a positive.

James Hartley of the Ministry of Business, Innovation and Employment said it was considering the requests for change to the voluntary, work-based savings scheme.

“The Government is considering the Commission’s recommendations, including those relating to the KiwiSaver contributions holiday, and will respond to those recommendations in due-course,” Hartley said.

The Commission’s general manager investor education, David Boyle, said the changes were essential to take KiwiSaver from “infancy to adolescence” in good shape.

He was admandent the work “holiday” needed to go.

“That word gives the wrong impression that it’s something good,” he said.

“New Zealanders need to be made aware how financially damaging taking a five year break can be – it shouldn’t be seen as a holiday.”

Boyle pointed out suspending payments meant losing not only the employee and employer’s contribution but also the $521 annual tax credit.

He said if the “suspensions” were reduced to one year people could reassess their financial situation and if necessary take another year.

“A lot of people are on a “holiday” when they have recovered financially.”

“Some actually forget they have stopped paying into their KiwiSaver.”

Boyle said taking a holiday on an income of $35,000 meant a loss of more than $2600 a year including the tax credit.

“Losing that amount has a huge impact on someone when they have stopped working.”

More than 765,000 people were taking a break from payments in the last financial year, to June 2016.

And that number was increasing each year, according to Financial Markets Authority data.

Savers can take a break of up to five years. But a five-year break at age 25 would cost around $40,000 by the time savers reach 65.

ANZ, New Zealand’s largest KiwiSaver provider, says that more than 80 per cent of its members who ask for a contributions holiday take it for the maximum five years. Many then roll over onto another holiday when the first finishes.

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