Chartered Accountants & Financial Advisors New Zealand Staples Rodway

What is KiwiSaver?

KiwiSaver is a work-based savings scheme designed to help New Zealanders save for retirement.From 1 July 2007 if you start a new job or choose to join KiwiSaver you will be required to contribute 4% or 8% of your gross salary to your KiwiSaver account. Additional contributions can also be made.

What are the Incentives?

The Government announced several incentives,including those in the May 2007 budget, which make KiwiSaver very attractive.The main incentives are –Compulsory matching employer contributions– from 1 April 2008 your employer must match your KiwiSaver contributions, starting at 1% and increasing annually to 4% in 2011;Employer contributions will be tax free up to 4%;The Government will contribute $1,000 up front as well as matching your first $1,040 each year;The ability to make a withdrawal for the purchase of your first home after three years, including a Government contribution of up to $5,000 for this purpose (subject to certain criteria);You can apply 50% of your contributions after one year to pay off your mortgage.

Where does my money go?

There are several funds that have been established specifically for the purposes of KiwiSaver. When you sign up to KiwiSaver you don’t have to select a specific KiwiSaver fund, but if you don’t the IRD will allocate you to one of six “default funds”.The default funds because of their conservative nature (at least 75% in cash investments) may not be the most appropriate for your particular circumstances, particularly if you are 10 years or more away from retirement. An alternative is to select your own KiwiSaver fund which gives you more flexibility and therefore better meets your investment needs.

The Staples Rodway KiwiSaver Scheme

The key point of distinction of the Staples KiwiSaver Scheme is that the investment choices are not confined to investment products provided by one organisation. Instead, independent investment managers have been selected on the basis of performance and managerial quality. Performance of the managers selected will be monitored and adjustments made if required so as to maximise returns to investors. This “best of breed” approach avoids the potential conflict of interest issues that can apply to other schemes that only offer related party products.

Other Features of the Staples Rodway KiwiSaver Scheme:

Flexible Investment Strategy – You are able to allocate your contributions between our Conservative, Balanced and Growth funds. This flexibility allows for individuals with varying risk and return profiles. You may change your mix of funds at anytime if you wish.

Investment Assistance – When you join the Staples Rodway KiwiSaver Scheme you will be able to complete a simple questionnaire that will help you determine the optimal mix of funds appropriate for you, or alternatively rely on automatic allocations considered appropriate for your age group. Further assistance is available if necessary.

Mortgage Diversion Facility – You will be able to “divert” half of your contributions to pay off a mortgage (with participating lenders) on your principal residence. This option is available after you have been in KiwiSaver for one year.

Low Fees – There are no entry fees. Our ongoing management fee will be competitive. You also receive a $40 per year fee subsidy from the Government.

Ease of Use – Enrolling is easy. You will be provided with investment statements to complete. Administration of our scheme is carried out by AON, New Zealand’s premier superannuation administration company.

PIE Classification – Our funds will be subject to the “PIE’ regime, meaning the scheme will receive favourable tax treatment. Effectively, the scheme pays tax at your marginal tax rate but capped at 33% (30% from 1 April 2008). Tax savings from your marginal rate are passed on to you.

Annual KiwiSaver Investment

Example: James Bond (age 45) earns $60,000 pa. At 4%,he saves $200 per month, or 4% of his salary.
From 1 April 2008, his employer will start contributing $50 per month (increasing to $222 per month by 1 April 2011). By 65 he will have $153,765.

Assumptions

Pay increases at 3.5% per year. His contributions will also increase in line with his pay (eg $200 today will be $230 in 4 years).
His contributions, the government’s tax credits and the government’s kickstart contribution will grow at 2.5% after tax of 33% and inflation of 2% per year.
No contributions holidays are taken.
The one-off Government contribution of $1,000 is received 3 months after the first contribution is deducted.

Note: Example taken from Sorted Website: www.sorted.org.nz

You must receive an investment statement before you can become a member of the Staples Rodway KiwiSaver Scheme. Application forms are in the back of the Investment Statement or contact us at:

kiwisaver@staplesrodway.com
Staples Rodway Superannuation Limited
C/- Staples Rodway Limited
Level 11, Tower Centre
45 Queen Street
Auckland
Ph 0800 44 64 99

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