The Chief Economist of the Financial Markets Authority (FMA) says he can also think of plenty of things he’d rather do on a weekend than review his annual KiwiSaver statement but it’s too important for people to ignore.
“If I could jump into their home on a Sunday afternoon and get [people] to do one thing, it’d be to spend 10 minutes reading the statement,” Stuart Johnson told interest.co.nz on Wednesday.
KiwiSaver annual statement season has rolled around, which means KiwiSaver members will either start receiving, or have received, an annual statement from their KiwiSaver provider.
These annual statements show – among other information – the contributions, balance, investment returns and fees of every KiwiSaver member in the July 1 to June 30 year.
Johnson says KiwiSaver makes up an important part of retirement income and people need to take the time to review their annual statements, as they’ll benefit in the long-term.
His key advice when it comes to looking over your annual KiwiSaver statement is seeing how much money you currently have in the scheme.
From there, it’s looking at the projections of what you’re going to get at retirement – and what that’s going to translate to as a weekly payment or figure.
Many people retire at the age of 65 in New Zealand as that’s when they’re able to access both their KiwiSaver and the NZ Super.
“Try and use that information to think about what your target retirement date is,” he says.
After that’s been mulled over, according to Johnson the next step is to see if you’re getting a good deal out of your KiwiSaver. The way to measure that is through the KiwiSaver fees.
“A really good thing about the statement is that it shows you exactly in dollar terms what you're paying in fees. What we're really interested in here is consumers getting a good deal,” he says.
“So that's going to be different for different people. I always like to think about total returns and we would think about total returns as returns minus fee. And that should give you an idea of whether your KiwiSaver is working out for you.”
Johnson’s career has spanned Australia, London, and now New Zealand, giving him experience with retirement saving schemes in three countries. He says KiwiSaver is his favourite when it comes to simplicity.
“Kiwisaver is a really simple mechanism for saving for retirement,” he says.
Over $100 billion
Research firm Morningstar reported that KiwiSaver funds under management reached $108.6 billion in March, up from $104 billion in December.
The FMA’s 2024 annual KiwiSaver report won’t be out until later in the year but when asked to sum up the twelve months to March 31, 2024 in the KiwiSaver space, Johnson described it as a positive period.
“We talk about having the cost of living crisis right now, but people are, by and large, still contributing. So that's a real positive,” he says.
The FMA’s 2023 annual report showed there had been a significant rise in financial hardship withdrawals and savings suspensions in the 12 months to March 31 2023, compared with the previous year.
Inland Revenue releases monthly KiwiSaver statistics, most notably on financial hardship and first home withdrawals. KiwiSaver withdrawal figures released for the month of May 2024 reached an all-time high of $182.5 million.
Receiving the KiwiSaver government contribution
The end of this week also marks the cutoff for KiwiSaver members to make sure they can receive the full amount of the Government’s KiwiSaver contributions.
Each year, the Government contributes up to $521.43 towards your retirement savings. Members of KiwiSaver don’t need to do anything to claim this contribution as KiwiSaver providers will do this for them.
The maximum amount the government contributes is $521.43 and to receive the full amount, KiwiSaver members need to save and contribute at least $1042.86 of their own money between July 1st to June 30th each year.
People have the option to make additional voluntary contributions in order to reach the $1,042.86 benchmark, however contributions need to have been made by June 30th.
More information can be found on Inland Revenue here.
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