Staples Rodway KiwiSaver

What is KiwiSaver?

KiwiSaver is a work-based savings scheme designed to help employees save for retirement.

Employers have to automatically enrol new employees and existing employees that choose to opt in to the scheme. Employers will have to deduct 2%, 4% or 8% from these employees’ salary and wages.

More than one million New Zealanders have enrolled in the scheme to date since the launch in 2007. The lower 2% contribution threshold for employees since 1 April 2009 is expected to attract even more people to the scheme.

What do employers need to do now?

Employees will want information on KiwiSaver and how to invest their money. One decision an employer has to make is whether to choose a KiwiSaver scheme for their employees who do not choose their own scheme.

Employers have the option of either doing nothing or taking a ‘front foot’ approach. If you do nothing, employees that don’t choose their own KiwiSaver scheme will end up being allocated to one of six “default schemes”. Because of their conservative nature (at least 75% in cash investments), these schemes may be very inappropriate for some employees, particularly those 10 years or more away from retirement.

An alternative pro-active approach is to choose a particular KiwiSaver scheme as your chosen scheme. This means that if employees don’t choose their own KiwiSaver scheme they will go into their employer’s chosen scheme. By electing for this option your employees are likely to end up in a scheme that is more suitable to their investment needs.

Essentially, not only will you be taking better care of your employees but you will be guided through the implementation process. Employers who choose a scheme will not be responsible for the performance of that scheme and will not be regarded as an issuer or promoter of the scheme under the Securities Act.

Key Distinction of the Staples Rodway KiwiSaver Scheme

The major point of distinction of the Staples Rodway KiwiSaver Scheme is that it is not a captive scheme, that is, 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 over the long term. This “best of breed” approach avoids the potential conflict of interest issues that can apply to other schemes that only offer related party products.

What will it Cost?

There is no cost to employers for choosing the Staples Rodway KiwiSaver Scheme.

Other reasons for choosing the Staples Rodway KiwiSaver Scheme

1. Low Fees – There are no entry fees. Our ongoing fee will be competitive.
2. Ease of Use – Employees can choose any combination of our Conservative, Balanced and Growth funds. An Investment Attitudes Questionnaire will help them with their choice. Alternatively an employee can choose an age group option which will mean they are automatically invested in a combination of funds considered appropriate for their age group.
3. Flexible Investment Strategy – Employees can allocate any or all of their contributions between our Conservative, Balanced and Growth funds. Flexible allocation means that our offerings suit individuals with varying risk and return profiles.
4. Mortgage Diversion – The Staples Rodway KiwiSaver scheme provides mortgage diversion facilities with participating lenders.
5. Portfolio Investment Entity (‘PIE’) classification – Our funds will be subject to the PIE regime, meaning tax savings for higher income earners (annual taxable income greater than $70,000 per annum), and tax efficiency for lower income earners (annual taxable income less than $48,000 per annum).

KiwiSaver for the Employer

Employers’ main KiwiSaver responsibilities include:

• giving a KiwiSaver information pack (KS3) to new employees when they start if the employer is satisfied the person should be automatically enrolled, and to existing employees who want to opt in or ask for one
• giving Inland Revenue the names, IRD numbers and addresses of all new employees and those who want to join KiwiSaver, using a new form - KiwiSaver enrolment details (KS1) that they send in monthly with their employers monthly schedule
• deducting employees’ contributions from their before-tax pay and forwarding them to Inland Revenue along with their PAYE
• ensuring new employees’ contributions start from their first pay and forwarding them to Inland Revenue along with your PAYE
• refunding any contributions deducted if they haven’t been passed on to Inland Revenue when an employee opts out of KiwiSaver
• providing investment statements to all employees if the employer has chosen a preferred KiwiSaver scheme
• acting on opt out and contribution holiday letters
• start or stop deductions when Inland Revenue advises you to
• keeping the required KiwiSaver records

Since 1 April 2009 employers are also required to match employees’ contributions of 2% of salary and wages (increased from 1% in the 2008/9 tax year). As from 1 April 2009, the employer tax credit no longer applies.

Note: The employer will have to pay employer superannuation contribution tax (ESCT) on any employer contributions exceeding the compulsory 2%.

Further information for employers about what KiwiSaver means for them is on the Inland Revenue website.

What is KiwiSaver?

KiwiSaver is a work-based savings scheme designed to help New Zealanders save for retirement. If you start a new job (and don’t opt out) or choose to join KiwiSaver as an existing employee you will be required to contribute 2%, 4% or 8% of your gross salary to your KiwiSaver account. Additional contributions can also be made.

What are the Incentives?

Government incentives make KiwiSaver very attractive. The main incentives are:

• Compulsory matching employer contributions– from 1 April 2009 your employer must match your KiwiSaver contributions at 2% (formerly 1% in the 2008/9 tax year);
• Employer contributions will be tax free up to 2%;
• 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);
• After one year you can apply 50% of your contributions 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.

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 30%. 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

1. 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).
2. 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.
3. No contributions holidays are taken.
4. 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

Annual KiwiSaver Investment

* In addition, you will receive $1,000 from the government in the first year that you join the scheme

Contact Us

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:

Ph 0800 44 64 99