Peter Hall, head of business ventures at ASB Bank, answers some questions about KiwiSaver in light of volatile world markets.
KEY POINTS:
Q. How much information will people get about their individual accounts?
A. This varies with providers, but the law requires minimum information is given. ASB KiwiSaver scheme clients get access to a members' site with online access to view account details and daily unit prices at www.asb.co.nz; annual member and tax statements; a six-monthly newsletter on fund performance sent out in April and October; and quarterly online performance information.
Q. What if I am enrolled automatically but want to pull out? Who has my money and when do I get it back?
A. For the first three months after enrolling, Inland Revenue holds contributions to give you time to decide if you wish to choose your KiwiSaver provider. If you have been automatically enrolled, you can opt out any time from the end of the second week, until eight weeks after you start your new job, by telling your employer or Inland Revenue. Your employer can refund contributions that have not yet been passed to Inland Revenue, and Inland Revenue will refund contributions it has received.
Q. If balances have fallen, can I take my money out?
A. Once you have joined, you generally can't get money out until you become eligible for New Zealand Superannuation at age 65. There are exceptions to this, such as a one-time withdrawal for a first home, significant financial hardship or serious illness, or if you emigrate. You can also choose to transfer to lower-risk funds, or to a different KiwiSaver scheme. But you should remember KiwiSaver is a long-term investment. Investment funds that include higher-risk investments can go up and down in value in the short term, but they tend to provide the best returns over longer periods of time. Fees for switching funds or providers vary with each KiwiSaver scheme.
Q. Does the popularity of KiwiSaver make funds less volatile? Are investment funds offered by bigger players better than those of smaller players?
A. The type of fund an investor selects mainly determines the level of volatility, which is also affected by the provider's investment decisions. A fund that is totally invested in shares in limited markets may experience high volatility. In contrast, a fund that invests solely in lower-risk investments, for example cash and fixed interest, or diversifies across multiple assets and markets, is likely to experience lower levels of volatility. The provider's size has little impact on decisions.
Q. How long will the Government hand-outs - $1000 to sign up - be available?
A. To remove or change these contributions, there would need to be a change in the law governing KiwiSaver. These benefits are also subject to eligibility criteria.
Q. How long before I can expect to see balances in KiwiSaver accounts start improving?
These are driven by contributions, tax, fees and investment fund performance. Regular contributions will continue to increase account balances and these will be further boosted by the addition of, where eligible, Government contributions of up to $20 a week and, from April 1, employer contributions. Fund performance depends on the performance of the markets and the provider's investment decisions.
Q. If I have questions about my KiwiSaver account where is the best place to get answers?
A. If you need to find out about fees, conditions of your scheme, fund performance or account balances and transactions after they have been transferred to your provider, contact your KiwiSaver provider. If the question relates to transactions before transfer, go to Inland Revenue.
