A.       Employees contributing to KiwiSaver through their salary or wages can only choose between 2%, 4% or 8%. Having three defined options makes it easier for payroll systems. The 2% will increase to 3% on 1 April 2013, but 4% and 8% will be unchanged.

 

But you should be able to save more into your KiwiSaver fund by negotiating directly with your provider and setting up a direct debit. Each provider has a minimum contribution level, but $20 per week is not uncommon. 

 

Dealing directly with your provider means that you have control. You can stop your additional contributions at any time, or change the amount (within their minimum limits). This is also an opportunity for you to learn more about the fund you are in, if you are not familiar with it already. Do you know how and where your funds are invested? What is the risk profile of your particular fund? What has its performance been like, relative to its peers?

 

There are 32 KiwiSaver providers, most of which offer a choice of funds such as conservative, balanced, growth or ‘life stages’. Someone who has been automatically enrolled through their workplace will be in one of the six default schemes, in a conservative fund. They may not realise that they have been randomly allocated to that fund by Inland Revenue. 

 

Many employed KiwiSaver members know very little about the fund they are in. “I think it begins with an A” is the kind of response I often get. 

 

With many KiwiSaver accounts now worth in excess of $10,000, not knowing anything about the fund you are in is rather like not knowing what kind of car you own. KiwiSaver funds do vary – some are like high performance sports cars while others are more like nippy hatchbacks. Choosing a KiwiSaver fund that meets your particular needs should take at least as much care and attention as buying a car that is right for you.

 

From 1 April 2013 providers will be required to send their members more frequent reports. Hopefully this will generate a greater interest in the savings that they are accumulating and the type of fund they are in.

 

At your age with retirement just 3 years away, there is a strong incentive to save as much as possible to make your retirement years more comfortable. NZ Super is available to all eligible New Zealanders at age 65 and is the envy of many countries around the world. However, many single retired folk living alone will struggle to live on the current rate of around $348 per week. 

 

Increasing KiwiSaver contributions may be a good option for younger working people as well, if they can afford it. Contribution rates can be changed from 2% (the default rate) to 4% or 8% by filling out a KS2 form and giving it to your employer. You can change your rate once every 3 months – up or down - as your circumstances change.