KiwiSaver 'kick-start' cut - will it impact enrolment?

#1

Interesting news from the Budget yesterday - the $1000 KiwiSaver ‘kick-start’ payment (in place since 2007) has been removed. This means that people who enrol for KiwiSaver going forward will not receive the kick-start payment.

Anyone who is already enroled will not be affected, including those recently joined members who have not yet received their payment (it can take around 90 days for Inland Revenue to make the payment after someone first enrols).

Do you think this will impact on sign-up rates for KiwiSaver? Keen to hear your thoughts!

#2

Hmm for me the $1000 kick start was a big part of signing up for the scheme, but then it launched when i was a teenager and when kiwisaver was quite new and so was a good incentive for me. now i think that kiwisaver is pretty well established and there’s lots of talk about saving for retirement so maybe people will want to sign up because theres been a lot more awareness about the importance of retirement saving lately.

#3

Didn’t make any difference to me. I’m not in Kiwisaver and don’t intend to be at this point in time.
But I’ve heard a few people say that they signed up because of the incentive. Some accountants were promoting it.
Being self employed means I don’t need to pay myself wages so no kiwisaver to opt out of.

If I heard correctly, people that are in financial hardship, their kiwisaver is now protected from Bankruptcy proceedings.

#4

I thought it would affect enrolment and I think time since the cut came in has shown it has affected it significantly. I assume that is mostly in the younger end of the market as most in the already employed section of the market had either enrolled, or consciously decided they wouldn’t.
In the big scheme of things, I don’t think the $1000 kick start makes a big difference. The important thing for me is that my employer matches my contributions, and long term, it is this that gives me my biggest input, that plus the compounding nature of any gains.

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#5

Coming to the $1.000 kick start that was stopped,a while ago,I I had heard that this National Government does not want ths Kiwi Saver at all,they want to do away with it,in the end they will,there’s nothing stopping them from taking back what they put in to it,already had heard they make money from all this,I find they are a bit too greedy

#6

@Ninja, this is not a political blog. But I’ll take your bait.
There is plenty stopping them taking the govt contribution back. They haven’t got it. It is in various investments all around the world. Many people have withdrawn it already as well.
Could you explain how you “heard” they are making money from “all this”? 

#7

Governments always make money on your investments,interests,this Government can take there contribution back any time they like,but can’t touch yours,I heard a long time ago they make money of your interests don’t know if that’s true or not, it’s like a Term Deposit,they make the interests of your money to what you call tax,depending on the length of time your Term Deposit is in for,your told how much your making,you don’t get the full amount,like KIwi Saver you pay taxes I would say,you never get the full amount you have to pay some one to manage it

Hope that is clear

#8

@Ninja. None of the KiwiSaver deposits, your contribution or the govt contribution, sits directly in Govt accounts. It is with the Kiwi Saver Providers and they invest in elsewhere. They have no more access to your KiwiSaver than they have to any other investment you may have. They don’t earn interest on your investments. Tax is paid just as it would be for other gains made on investments.

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#9

Yes I had heard that the KiwiSaver deposits plus my contribution or the govt contribution doesn’t sit directly in the Govt accounts,its put elses where,but as I was saying if the Govt decides to do away with KiwiSaver they can take there $1,000 kick start or what ever they put in,they can take it back,but they cant touch your contribution,plus its not Government Guarantee

The KiwiSaver Providers have to put it into a separate Account away from there own accounts,if they are to go belly up im sure they have to pass it on,they cant spend it

What ever account your Kiwi Saver is put into it still earns interests plus a little bit of money is taken out of your KiwiSaver Account to pay for thoses Providers to maintain it

#10

People lost money in retirement investments in the subprime crash of 2008. What I understood happened was that subprimers borrowed money from banks for property purchase and defaulted on their mortgages when interest rates rose and property values dropped. Some investment banks had created a new type of investment package (or bundle) which included subprime mortgages and other loans. The newly created investment package included retirement funds. Retirement funds are considered a good investment risk so the newly created investments were given a AAA (triple A) credit rating with Standards & Poors (which is like a Veda credit score individuals are assigned and the score equates to whether you are a good or bad risk). The cash people put into Kiwisaver gets invested into other investments and one hopes that it gives a good return over time.  With the subprime crash what wasn’t revealed was the Mortgages that were later part of the investment bundle had been given to subprimers (people that were a bad credit risk) So when interest rates changed and mortgages increased sharply the mortagees couldn’t afford the repayments so they stopped paying. I don’t know how the cash gets directly invested from Kiwisaver but it may form part of an investment package. Some of the cash would be invested in NZ and some overseas. We would hope that whatever investment form kiwisaver takes, it remains transparent so makes it harder for people to manipulate the contents and exposing us all to the fallout of financial fraud. At the end of the day investments of any sort are at their core, cash. That cash ultimately comes from the working class people, you and me. Before you hand over your money to anyone for any reason it pays to know what actually you are buying into. Know the risk. I know retired people who get huge shocks when it comes time to “cash-in” their financial plans and find they didn’t have anywhere near the amount in the plan that they thought they should have. Too late then.

Keep in mind these are the views of fellow BNZ Community users, and not BNZ.