Kids miss out on KiwiSaver top-up
The past five years has seen a transformation in the rights of workers to enjoy a safe, healthy work environment.
The Health and Safety at Work Act 2015 requires that workers are given the highest level of protection from workplace health and safety risks, so far as is reasonably practicable. This includes risk to both physical and mental health.
Many organisations provide training and benefits to employees as part of a health and safety or wellness programme. This can include employee assistance programmes which provide free counselling and support, or a wide range of benefits, such as free gym memberships and health checks.
Although health and safety programmes are a cost to employers, there are benefits including fewer sick days, higher productivity and lower staff turnover.
Historically, health and safety programmes have focussed more heavily on physical health and safety but mental health issues are now seen to be just as important. Stress is a leading cause of absenteeism, low morale and low productivity.
The link between stress in the workplace and stress in relationships at home is undeniable and it works both ways. Stress at home can be transferred into the workplace and vice versa.
But employers have been slow to pick up on one of the biggest causes of employee stress; money stress. Studies around the world have shown that money is one of the greatest causes of stress. It ranks higher than stress from work or relationships. Money stress affects mental and physical health and in turn this flows through to affect work performance and company profitability.
Financial health is the missing link in workplace wellness.
Improving the financial health of employees is no more difficult than improving their physical or mental health. It involves a combination of training and practical support.
Enlightened workplaces now offer financial capability training covering basics such as budgeting, debt management and saving for retirement. Free personalised financial advice can be part of a financial health programme, as well as practical support in the form of discounted products and services through group buying schemes (for example, insurance and mortgages) and low-cost wage advances so employees don’t need high-interest payday loans.
Financial capability training is very much linked to life stages and income level and works best if it is customised to a particular workforce. For younger employees, financial priorities will include paying off student loans, saving a deposit for a house and budgeting. In mid-career, the key issues are mortgage reduction, insurance and retirement savings, while in later stages retirement planning is top of mind.
Money stress can be caused by a number of factors: a traumatic event such as the end of a relationship, illness or death; poor budgeting; or mental health problems which lead to excessive spending. Money stress can cause employees to demand pay increases or seek out higher-paying jobs, but if the underlying problems of excessive spending and poor financial decision-making are not dealt with, higher incomes will not lead to a reduction in stress.
Worries about the affordability of retirement can lead to older employees choosing to stay in the workplace longer than is ideal for either themselves or their employer.
There are several financial capability programmes available for employers and individuals.
The Commission for Financial Capability has developed a workplace programme which is run once a week over several weeks with a different weekly topic. This programme can be delivered by trained facilitators or by employers themselves. Massey University offers courses through its Fin-Ed Centre with a mix of face-to-face teaching and online learning.
Industry Training Organisations such as The Skills Organisation also provide financial capability resources for employers.
The workplace is the ideal environment in which to bring adults together to improve their financial capability. As financial capability becomes more widely taught in schools, employers can look forward to a more financially astute workforce. However, while baseline financial capability may increase over time, ongoing support through the various life stages will still be needed to keep money stress at bay.
Liz Koh is an authorised financial adviser and author of Your Money Personality: Unlock the Secret to a Rich and Happy Life, Awa Press. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847. Q. I have a 9-year-old granddaughter. Shortly after she was born I opened a KiwiSaver account for her and contributed $55 per month to that account. Earlier this year I increased the contributions to $90 per month or $1080 per year. This sum is above the $1042 per year to qualify for the Government top-up. My granddaughter does pay income tax at 10 per cent on a term deposit and also a savings account, both in her name. My question is, is a child entitled to this top-up and if so, when and how can we claim it?
A. Sorry, the member tax credit of $521 that is available to KiwiSaver members who contribute $1042 into their accounts each year is only available to those who are over 18 and under 65 (or for those over 65 who have been in the scheme for fewer than five years).
Q. I have a friend who has been with her partner for about three years. She is a reasonably high earner, has a good amount in KiwiSaver, does all of the unpaid work around their house and basically has the role of provider whether she likes it or not. He is at best a low-earner (if he is even working) and pays for little due to this, has a child outside of their relationship that he pays for, he does little to nothing around the house and has no KiwiSaver or savings whatsoever.
They rent a house which they pay half and half for but she pays for everything else and she paid for all of the furniture. I understand that the house deposit that she is saving for would come solely from her income alone as he is unable or unwilling to save and contribute. I suspect she is also paying off debts incurred by him but under her name as he has bad credit.
Their finances are separate and they do not have access to each other’s accounts. He often threatens to break up with her and ‘‘take everything she has’’ meaning that if she were to leave, she would be significantly worse off than him and he literally would have made tens of thousands from being in the relationship. This concerns her. Is this the case? Can he legally take half of everything she has despite him contributing very little to the relationship, both in money and unpaid chores around the house? Is there anything that she can do? Even to get a lawyer to help her will cost her a lot and will cost him nothing.
A. Yes, if they have been together for three years, he can make a claim to half of their relationship property, which would usually include things such as, in this case, her income during the relationship, savings and the household furniture.
Lawyer Thomas Biss tells me that’s because the law assumes that if one couple is a saver and the other a spender, the saving half gets some of the benefit of the spender’s spending – and so on. They take joint ownership for their relationship decisions.
She could set up a contracting out agreement that would protect some of her assets but he would have to agree to it and get his own independent legal advice.
Q. My husband and I have no children together but he does have a daughter from a previous relationship. My husband and I have been together for 21 years. She is now 28, with her own children. We all get along fine. One weekend while picking my stepdaughter up from his ex’s house, her step-dad made a comment that when her dad dies she will be ‘‘rich’’. My husband hates talking about wills and dying so we have no will at the moment. Where does this leave me if anything happens to him? Would I have to sell up everything I’ve worked for and give her half?
A. Biss recommends you get some advice from a lawyer who will be sensitive and attentive to what you all want to see happen with your and your husband’s assets.
It’s reasonable that your husband would eventually want his share to go to his daughter and you may agree that yours should go there when you die, too, if you have no dependants.
But provision can be made for you to stay in your property if he dies first, with something called a life interest. This gives you permission to use an asset even though his daughter would own a share of it.
Biss says the best outcome would be for you and your husband to have properly drafted wills that get the money where it needs to be – possibly with the use of a family trust.
If your husband dies without a will, you’d have a claim to 50 per cent of your relationship property. Then, you’ll get the first $155,000 of the remaining estate and a third of the rest. The other two-thirds will go to his daughter.
Do you have a personal finance or consumer question? Email susan.edmunds@stuff.co.nz