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I am 27, have a mortgage and earn $60kp.a. I am not in KiwiSaver but as the min contribution is decreasing to 2% and tax will be lowered I want to join. With the current state of the economy I'm nervous to enter a high risk scheme. What do you recommend?
31/03/2009

Thank you for your enquiry. The addition of the 2% contribution rate and the tax cuts definitely make KiwiSaver a lot more affordable and I'm glad you can see that.

In regards to which Fund to choose (Growth, Balanced or Conservative), page 11 of the Investment Statement which I have attached for you to look at can help. Given that you are 27 years old, you will be invested in KiwiSaver for almost 40 years. Historically, growth assets (shares and property) produce the best long-term results. Therefore, the Growth Fund would seem to be most appropriate for you since you have a long time until retirement.

Please note that the Growth Fund is fully diversified and that it does contain a portion of income assets to minimise risk. Furthermore, we actively manage our Funds to protect and build our clients' wealth. It's this active investment style that has resulted in good performance thus far compared to everyone else. You also have to take into consideration that we have likely been through the worst of the economic downturn and that over the next couple of years the market is set to recover. Remember once again, you will be invested for close to 40 years.

If i join, am I locked in until I turn 65?
10/12/2008
It may be more flexible than you think. There are circumstances when you can access your funds before you reach the age of 65 including:

• if you are buying your first home (after three years' membership) you can withdraw all of your own contributions, your employer contributions and any investment returns (but not the government money). In some cases this can be to buy a subsequent home if you currently do not own one (as a "second-chance" home buyer);
• if you emigrate permanently (after a year has passed) you can withdraw everything (including the $1,000 kick-start) but not the government matching contribution of up to $1,042.86 per year (this is repaid to the government);
• if you experience significant financial hardship you can withdraw all of your own contributions, your employer contributions and any investment returns (but not the government money); and
• if you suffer serious illness you can withdraw all of the money.

I'm nearing the retirement age - is KiwiSaver worth the hassle?
09/12/2008
There are potentially significant gains to be made in a short period of time for those people that are close to retirement age. For example, someone who is 63 and is already retired - if they were to contribute $20 per week for the minimum period of 5 years, their own contributions over that time would add up to $5,200. After you add the government incentives (the $1,000 kick-start and the matching government contribution of up to $20 per week) that person's KiwiSaver account will be worth over $11,000 and this is before any returns are generated by their KiwiSaver scheme provider but before fees and taxes are deducted. As you can see from this example KiwiSaver can be a nice bonus for your retirement.