KiwiSaver Statistics December 2008
The continued growth in KiwiSaver saw membership reach 900,509 members at 31 December 2009 with 51% being females. Nearly half opted in via a provider of their choice with 35% going to one of the default funds due to lack of personal choice.
Of interest, 136,330 members are aged 17 or under and only 166,795 members are ages 55 or over.
Both of these age groups can get considerable value from joining KiwiSaver and membership of these people is expected to be the growth area.
Changes being introduced from 1 April 2009 include the minimum members contribution dropping to 2% but anybody availing of this reduced amount should seek financial advice to ensure they are maximising the benefits.
Employer chosen schemes are also increasing in number as employers and staff see the benefits of membership through this type of facility.
Contact Thorners if you have any questions on how KiwiSaver can work for you or your employees.
Click here to email Thorners or Call Us on (04) 528 8088
Click here to view our disclosure statement.
Mortgage Interest Rate changes 23 February 2009
Mortgage interest rate adjustments continue and Thorners now have a low 5.80% p.a. 12 month interest rate available.
Longer terms from 48 months at 6.30% p.a. and 5 years at 6.50% p.a. have risen slightly since last week.
Contact Thorners to review your current mortgage situation and to see if we can help you to ease the current financial squeeze.
Click here to email Thorners or Call Us on (04) 528 8088
Click here to view our disclosure statement.
Mortgage Interest Rates Dive
Mortgage interest rates dive
If you are feeling the financial squeeze, ask us to review your current mortgage arrangements to see how they can be restructured to take advantage of the new lower interest rates. You may be surprised how simple the process is and the savings to be made.
We can offer a fixed interest rate of 5.95% p.a.** for terms 6 months through to 2 years, no refixing fees on fixed rate rollovers and no ongoing bank transactional fees.
We specialise in…
· New purchases;
· Top ups to clear existing debt;
· Refinancing your existing mortgage;
· Home Equity Release (Sentinel Lifetime Loan);
· All of your insurance requirements
New Zealand wide service – let us know your situation today to allow us the opportunity to provide some options
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Call us today….
Thorners
22-26 Main Street, Upper Hutt
04 528 8088
** Mortgage Interest rates quoted are current at 19 February 2009 and subject to change – please call us to confirm
All lending is subject to meeting lenders application requirements and their acceptance of your application
KiwiSaver changes 1 April 2009 – Questions and Answers
WILL THERE BE ANY FURTHER CHANGES TO KIWISAVER?
The government believes that the necessary major changes have been made to ensure the scheme is sustainable and affordable, and will therefore leave the basic architecture of the scheme unchanged. However, as more information is obtained about the scheme’s performance, some of the administrative details of the scheme may be reviewed and adjustments made to make the scheme run more efficiently. The government will endeavour to ensure there is consultation with key stakeholders on any further changes.
I AM ALREADY A MEMBER OF KIWISAVER CONTRIBUTING AT 4%. WILL I AUTOMATICALLY BE MOVED TO THE MINIMUM CONTRIBUTION RATE OF 2%?
No, current members will continue to contribute at their current contribution rate but will have the option to change to 2% if they feel that this is in their best interest.
IF I AM AUTOMATICALLY ENROLLED IN KIWISAVER AFTER 1 APRIL 2009 AND MY DEFAULT CONTRIBUTION RATE IS 2%, CAN I ELECT TO CONTRIBUTE AT A HIGHER RATE?
Yes, once you are enrolled in KiwiSaver you may elect to contribute at a higher rate, either 4% or 8%.
WHY HAS THE FEE SUBSIDY OF $40 A YEAR BEEN REMOVED?
The fee subsidy was designed before further incentives were added in Budget 2007. The current member tax credit gives incentive to members who contribute to KiwiSaver, reducing the need for a fee subsidy.
If I reduce my contribution rate to 2% will this also affect my Mortgage Diversion with Grosvenor?
Yes. But with Grosvenor you don’t need to complete a form or do anything as our System automatically only divert the percentage allowed. Under the current legislation you can only divert up to 50% of YOUR contributions to the Grosvenor KiwiSaver Scheme. You can’t divert any other contributions such as lump sums, employer contributions or Member Tax Credits. So if you change your contribution rate to 2%, you will only be able to divert 1% towards a mortgage for your principal place of residence.
AS AN EMPLOYER, I CURRENTLY CONTRIBUTE 1% INTO MY KIWISAVER EMPLOYEES’ ACCOUNTS. HOW DOES SETTING THE MINIMUM EMPLOYER CONTRIBUTION RATE AT 2% AFFECT ME?
You will need to increase your employer contribution rate to 2% from 1 April 2009, but are not longer required to contribute more than this amount.
AS AN EMPLOYER, I HAVE ALREADY CHOSEN TO CONTRIBUTE 4% INTO MY KIWISAVER EMPLOYEES’ ACCOUNTS. HOW DOES SETTING THE MINIMUM EMPLOYER CONTRIBUTION RATE AT 2% AFFECT ME?
This depends on the contractual arrangement you have with your employee about KiwiSaver employer contributions. You may wish to re-negotiate your superannuation offer with employees.
How does discontinuing the employer tax credit affect me as an employer/ employee?
As an employer, from 1 April 2009 you will no longer be able to claim the employer tax credit of up to $1,040 per employee from the government. This will mean you will have to absorb the cost of employer contributions in the short-term. Over time, the government expects that employer contributions will become a part of the normal wage bargaining process. As an employee, initially the employer tax credit will have no effect. However, over time, employer contributions will become part of the normal wage bargaining process.
HOW DOES THE REDUCTION IN THE EMPLOYER SUPERANNUATION CONTRIBUTION TAX (ESCT) EXEMPTION CAP AFFECT ME AS AN EMPLOYER/EMPLOYEE?
As an employer, you will have to administer the ESCT exemption. If you pay your employees at an employer contribution level above 2% (that is, above the amount exempt from ESCT), you will have to pay ESCT on those contributions. If you are an employee and your employer contributes above 2%, your employer will now pay tax on your employer’s contributions that are above 2%. This in effect means there will be less money going in to your KiwiSaver account. For those employees whose employers pay employer contributions at the minimum amount, there will be no change to your employer contributions.
WILL MY TAKE-HOME PAY BE REDUCED AS A RESULT OF EMPLOYER CONTRIBUTIONS?
The KiwiSaver Act is being amended to ensure that when an employee joins KiwiSaver, the compulsory contribution from their employer is a genuine addition to their existing gross pay. Over time, the changes will make it possible for employers to take total remuneration approaches to wage bargaining. The government will allow such arrangements to occur, if they are negotiated between employees and employers in good faith.
Click here to view our disclosure statement
Click here to email Thorners or Call Us on (04) 528 8088
KiwiSaver changes from 1 April 2009 for contributors
The National Government has made a number of changes to KiwiSaver following the confirmation of election policies with some amendments. Most changes will come into effect from 1 April 2009.
The Government’s changes to KiwiSaver legislation will reduce the minimum contribution for employees to 2% of gross salary or wages, matched by a reduced maximum compulsory 2% contribution from employers.
Is 2%+2% enough?
WHAT DOES HISTORY SHOW
The Retirement Commission states that New Zealanders should use 70% of their current income as a guide to the annual income required to keep them comfortable during retirement. With total savings reducing from 8% of an employee’s gross salary or wages to only of 4% (2%+2%) per annum, it is unlikely to deliver this result. Therefore, there is a need for New Zealanders to either voluntarily increase KiwiSaver contributions above the new minimum or look to other investment vehicles to make up the difference.
This table shows the value of KiwiSaver based on an individual with 35 years until retirement wanting 70% of a $60,000 income, which will provide $45,000 per year in retirement. How much should he/she save to reach this target?
What hasn’t changed?
RECEIVING $1,000 FROM THE GOVERNMENT
All KiwiSaver members will still receive $1,000 from the Government into their account when they join, to kick start their savings.
TAX CREDITS TO MATCH YOUR SAVINGS
Members aged over 18 who live in New Zealand will receive “member tax credits” from the Government to match their own contributions. The tax credits match savings up to $20/week ($1,040/year) and continue until you are able to withdraw from KiwiSaver.
HOME OWNERSHIP ASSISTANCE
As well as being able to withdraw their contributions after 3 years, members may be eligible for a home deposit subsidy of up to $5,000.
MORTGAGE DIVERSION LOWERS IMPACT OF SAVING FOR HOMEOWNERS
KiwiSaver members who already have a mortgage can divert half of their contributions to pay off the mortgage, after one year of saving. This lowers the barrier to joining for people in this situation.
What has changed?
FROM 1 APRIL 2009
THE MINIMUM MEMBER CONTRIBUTION RATE
The minimum member contribution rate will be reduced from 4% to 2%. The minimum contribution rate of 2% will become the default contribution rate for new employee members from 1 April 2009.
THE MEMBER FEE SUBSIDY
The member fee subsidy will be discontinued from 1 April 2009.
CAPPED COMPULSORY EMPLOYER CONTRIBUTIONS
Compulsory employer contributions will be capped at 2% and the employer tax credit will be discontinued from 1 April 2009.
THE EMPLOYER SUPERANNUATION CONTRIBUTION TAX EXEMPTION
The employer superannuation contribution tax exemption will be capped at the compulsory employer contribution of 2% from 1 April 2009. (That is equivalent to 2% of the employee’s gross salary or wages.)
WITH IMMEDIATE EFFECT
CHANGES TO THE EMPLOYMENT RELATIONS ACT
The KiwiSaver Act will be amended to make it clear that upon joining KiwiSaver, no employee can have their gross pay reduced as a result of employer contributions. This will ensure that when employees join KiwiSaver, the compulsory contributions from their employer are a genuine addition to their existing pay. The changes will also provide employers and employees with the ability to negotiate their own arrangements in good faith. The Employer Relations Act amendment relating to KiwiSaver will then be obsolete, and will be repealed from the date of assent of the Employment Relations Amendment Bill.
Click here to view our disclosure statement
Click here to email Thorners or Call Us on (04) 528 8088
RECEIVING $1,000 FROM THE GOVERNMENT
All KiwiSaver members will still receive $1,000 from the Government into their account when they join, to kick start their savings.
TAX CREDITS TO MATCH YOUR SAVINGS
Members aged over 18 who live in New Zealand will receive “member tax credits” from the Government to match their own contributions. The tax credits match savings up to $20/week ($1,040/year) and continue until you are able to withdraw from KiwiSaver.
HOME OWNERSHIP ASSISTANCE
As well as being able to withdraw their contributions after 3 years, members may be eligible for a home deposit subsidy of up to $5,000.
MORTGAGE DIVERSION LOWERS IMPACT OF SAVING FOR HOMEOWNERS
KiwiSaver members who already have a mortgage can divert half of their contributions to pay off the mortgage, after one year of saving. This lowers the barrier to joining for people in this situation.
What has changed?
FROM 1 APRIL 2009
THE MINIMUM MEMBER CONTRIBUTION RATE
The minimum member contribution rate will be reduced from 4% to 2%. The minimum contribution rate of 2% will become the default contribution rate for new employee members from 1 April 2009.
THE MEMBER FEE SUBSIDY
The member fee subsidy will be discontinued from 1 April 2009.
CAPPED COMPULSORY EMPLOYER CONTRIBUTIONS
Compulsory employer contributions will be capped at 2% and the employer tax credit will be discontinued from 1 April 2009.
THE EMPLOYER SUPERANNUATION CONTRIBUTION TAX EXEMPTION
The employer superannuation contribution tax exemption will be capped at the compulsory employer contribution of 2% from 1 April 2009. (That is equivalent to 2% of the employee’s gross salary or wages.)
WITH IMMEDIATE EFFECT
CHANGES TO THE EMPLOYMENT RELATIONS ACT
The KiwiSaver Act will be amended to make it clear that upon joining KiwiSaver, no employee can have their gross pay reduced as a result of employer contributions. This will ensure that when employees join KiwiSaver, the compulsory contributions from their employer are a genuine addition to their existing pay. The changes will also provide employers and employees with the ability to negotiate their own arrangements in good faith. The Employer Relations Act amendment relating to KiwiSaver will then be obsolete, and will be repealed from the date of assent of the Employment Relations Amendment Bill.
Click here to view our disclosure statement
Click here to email Thorners or Call Us on (04) 528 8088
KiwiSaver Member Tax Credits – what, why and how to get them
What is the member tax credit?
How the member tax credit works
The member tax credit year is based on 1 July to 30 June. To receive the maximum member tax credit of
$1,042.86 you must have:
· been a member of a KiwiSaver or complying scheme for the entire year, and
· contributed at least $1,042.86.
If you join part-way through a membership year then at the end of the first year (30 June) you’ll receive a member tax credit in proportion to the length of time you’ve been a member. For example, if your start date is 1 January, then by 30 June you’ll be eligible for a maximum member tax credit of $521.43 (half of the annual maximum). How to calculate your membership start date is detailed below.
Important:
Employer contributions or any contributions you may divert to your mortgage aren’t included when calculating how much you’ve contributed in a year for the member tax credit entitlement. If you belong to a KiwiSaver scheme and another superannuation fund which has a complying fund, the tax credit will be paid to the fund that applies first.
Who can get it?
To qualify for the member tax credit:
· you must be 18 or over, and
· your principal place of residence must be in New Zealand, except for:
· a government employee who’s serving outside New Zealand
· a person who’s working overseas as a volunteer, or for token payment for a charitable organisation named in the Student Loan Act regulations and if the work meets one or more of the requirements set out in the Student Loan Schemes Act 1992.
Note:
If you turn 18 during the year and meet the residency requirement, you’ll get member tax credit for the portion of the year that you’re 18.
When do you get it?
Your scheme provider will claim the tax credit on your behalf from 1 July each year – you don’t have to do anything. It will be invested in your account anytime from July onwards, depending on when your scheme provider makes the claim. If you’re an employee and we haven’t received all your contributions from your employer when your scheme provider makes the claim, the balance will be paid once we receive it.
How to calculate your KiwiSaver Membership Start Date
Please note that due to a successful legislative challenge this is different to previously communicated
Active Choice Enrolments
1. If the member joined KiwiSaver between 1 July 2007 to 30 September 2007 and had deductions made from their salary or wages, or made a contribution into their KiwiSaver account prior to 1 November 2007, their eligibility for the member tax credit would commence from the earlier of:
· the first of the month in which their KiwiSaver scheme provider received a valid application for KiwiSaver membership; or
· the first of the month in which their first deduction had been made from salary; or their first contribution was received by their scheme provider or Inland Revenue.
2. If the member joined KiwiSaver between 1 July 2007 to 30 September 2007 but did not have deductions made from their salary or wages, or make a contribution into their KiwiSaver account until on or after 1 November 2007, their eligibility for the member tax credit would commence on the date their KiwiSaver scheme provider received a valid application for KiwiSaver membership.
3. If the member joined KiwiSaver on or after 1 October 2007 their eligibility for the member tax credit would commence from the earlier of:
· the actual date their KiwiSaver scheme provider received a valid application for KiwiSaver membership; or
· the first of the month in which their first deduction had been made from salary or wages or their first contribution was received by their scheme provider or Inland Revenue.
Enrolments through an employer
1. If the member joined KiwiSaver via their Employer their eligibility for the member tax credit would commence from the first of the month in which their first deduction had been made from salary or wages.
How is MTC calculated when membership is less than 1 year?
· The government intends to match member’s contributions up to a maximum of 20 a week, for the weeks they are a member.
· The annual MTC entitlement is $1042.86, which equates to approximately $2.86 a day (1042.86 / 365).
· A member’s MTC is therefore calculated at the lesser of ($1042.86 / 365) or the member’s actual daily contribution rate, for the number of days they are a member during the member credit year.
· The member credit year is 1 July to 30 June so a “part-year” calculation is only required in the first and last years of membership.
Click here to view our disclosure statement
Click here to email Thorners or Call Us on (04) 528 8088
