INTRODUCTION
Investing for the future is important in order to make things easier for you in your later years and being registered with your country’s retirement savings scheme is a must. There are so many advantages to being involved in such schemes. Every country will have its own rules and it is suggested you do your homework in order to familiarise yourself with your country’s retirement scheme.
The Features and Benefits of joining New Zealand’s Kiwisaver scheme
Written by R A Stewart
This is of particular interest to New Zealanders of those about to become New Zealanders. If you are from another country some of the information may be applicable to your situation since most countries has its own retirement savings scheme with incentives to encourage people to join in the scheme.
WHAT IS KIWISAVER
It is New Zealand’s retirement savings scheme. Kiwisaver began July 1st 2007 as a scheme to encourage New Zealanders to contribute to their retirement savings. It has been acknowledged that New Zealanders are good at spending but not good at saving; the scheme was devised to address this fact.
INCENTIVES
When kiwisaver was first introduced everyone who joined received $1,000 to kickstart their fund. On top of that was the $1040 per annum from the government. To receive this investors had to have invested at least $1,040 to receive the full amount. In other words, the government will match your contribution dollar for dollar to a maximum of $1,040.
However, The National Finance MInister Bill English removed the $1,000 kick start and halved the $1,040 annual contribution to $520 to balance the books during the Global Financial Crisis. (GFC)
Kiwisaver is still a fantastic scheme for investing money for your retirement though.
EMPLOYER CONTRIBUTIONS
Your employer contributions to your kiwisaver are 3% of your gross income so with your contributions + government contributions + employer contributions you will be left with a tidy sum on reaching the retirement age of 65 (New Zealand).
FEATURES AND BENEFITS
There are so many features and benefits of joining kiwisaver and it is important to distinguish between the two.
Feature is your money is locked in until you reach the age of 65
Benefit is you will have a pot of money ready for you when you retire.
50% RETURN ON YOUR MONEY
Depositing $1,040 into your kiwisaver every year in order to receive the full $520 is the same as receiving 50% on your investment for the first year; this is tax-free which makes joining kiwisaver a no-brainer.
OTHER BENEFITS
Another benefit of joining kiwisaver is that if you were to have investments and you end up on a government benefit, the interest earned on your money counts as income for assessing your entitlements. You are allowed to earn up to $160 (gross) before your government benefit is affected.
This is not applicable to those on Super which is the name for New Zealand’s pension. Those on a pension are allowed to earn as much as they like and their pension is unaffected. (Super is short for Superannuation)
WILLS
It is important to have a will otherwise legal expenses could swallow up your estate’s funds including kiwisaver if the unthinkable happens.
SUMMARY
Kiwisaver is a terrific scheme for putting money aside for your latter years. You are encouraged to read more about the scheme by reading books about kiwisaver from your local library or doing some research online.
ABOUT THIS ARTICLE
Robert A. Stewart has his own website www.robertastewart.com with several articles on personal finance.
You are welcome to print this off for easier reading. You have permission to use this article as content for your blog, website, or ebook.
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