Stop delaying — just sign up now!
QI emigrated to New Zealand a few years ago and was granted a permanent resident visa towards the end of last year. This means I can join Kiwisaver. My partner and I have already bought a house so my Kiwisaver will be a long-term investment. I have delayed joining Kiwisaver because I don’t know what scheme and fund to choose. I realise by delaying I am missing out on the employer 3 per cent plus Government top up. What is the best way to choose a scheme?
ADon’t waste any more time chewing over your options! All you need to do is fill out a KS2 form (your employer will have one or find one on the IRD website) and give it to your employer. They will start Kiwisaver deductions from your next pay day.
Your contributions will be sent to Inland Revenue (usually on the 20th of the following month). You will be provisionally allocated to a Kiwisaver scheme by Inland Revenue — either your employer’s chosen scheme, if they have one, or a default Kiwisaver scheme.
Inland Revenue will hold onto your own and your employer contributions for three months while you choose a scheme that suits you. This happens to every new Kiwisaver member who signs up through work.
After you’ve been making contributions for three months you will be enrolled into your own choice of scheme (if you have made a decision) or with the scheme you were originally allocated to. Inland Revenue will then pay in to your account all contributions that have been processed, with interest.
You have been procrastinating for too long. As you mention, you are missing out on 3 per cent from your employer plus $10 per week from the Government top up. Sign up today, then do your research. The Sorted website is a good place to start. This government-funded site is easy to navigate. Their Kiwisaver tools are designed to educate people who may have little or no knowledge of investments. Click on Tools then go to Kiwisaver Fund Finder. Not only is this a good comparative tool (fees, performance, service) it also has a risk profile questionnaire and links to the providers’ websites. This enables you to click through and see if you like the way they communicate. It is no good signing up to a provider only to discover that you don’t understand the information they send you, and their website is not user-friendly.
Sign up today, then do your research. The Sorted website is a good place to start.
Once you have found a scheme and fund that you believe suits you, contact the provider directly and arrange to sign up with them.
If you stick with the scheme allocated to you by Inland Revenue, you will find yourself in a conservative fund, as currently all default funds are conservative. However, a shake-up of default providers is on the cards. The status of the current nine default providers expires on June 30, 2021. Those providers that achieve default status from July 1 will have a lot more responsibility. The Government has proposed a mandate for default schemes to exclude investments in fossil fuels and illegal weapons; publish a “Responsible Investment” policy on their website; change the investment mandate from conservative to balanced; promote fee transparency and use the procurement process to put pressure on fees; and engage with members to help them make informed decisions about their retirement savings.
Shelley Hanna is a Financial Adviser with Peak Portfolio Management Ltd which holds a licence FSP702451 issued by the Financial Markets Authority to provide financial advice services. Disclosure information is available at www.peak.net.nz or call 06 8703838. The information provided in this article is of a general nature and should not be relied on as a recommendation to invest in a financial product. Send your Kiwisaver questions to shelley. hanna@peak.net.nz