Money Talk column

Can’t afford KiwiSaver or saving elsewhere?: You should still join. Close to half of New Zealanders 18 and over who haven’t yet retired say they are unlikely or very unlikely to join KiwiSaver, a recent AMP survey shows. But a glance at their reasons for not joining suggests they don’t yet understand the scheme’s flexibility. They are missing out needlessly.

KiwiSaver survives readers’ challenges. It must be the noisier people who criticize KiwiSaver on the grounds that they don’t trust the government. Such mistrust has been a common theme in readers’ letters. And yet a recent AMP survey of non-retired people 18 and over shows just 3 per cent of those unlikely to join KiwiSaver say it’s because they don’t trust the current or future government. I was surprised, too, that only two readers responded to the challenge in my last column “to come up with a government change — that’s at all likely to happen in a democracy — that would make KiwiSaver members regret having signed up now.”

Big bad government unlikely to spoil KiwiSaver. Every now and then, someone says to me, “The government must be paying you for all that favourable publicity about KiwiSaver”. It’s not, of course. And in any case, my coverage has been far from totally positive. As I’ve often said, KiwiSaver distorts savings decisions, because you can save only in certain types of vehicles. Also, the government — in other words the taxpayers — is paying many KiwiSaver members thousands of dollars to do saving they would do anyway. True, other members will save more because of KiwiSaver, but whether the whole thing is cost effective remains to be seen. The scheme is far from perfect, then. However, I can’t go along with some of the cynicism I’m hearing about how current or future governments might treat people who have signed up for KiwiSaver — with the speaker concluding that it’s not a good idea to join.

Ins and Outs of KiwiSaver tax credit. Judging by readers’ questions, confusion reigns about the government’s KiwiSaver tax credits, which match members’ contributions up to $20 a week or $1042.86 a year. The tax credits are paid to every contributing KiwiSaver member 18 and over until they reach NZ Super age (currently 65) or five years after joining, whichever is later. For example, if you join at age 63, you will continue to get the credits until five years later, when you are 68.

KiwiSaver bringing out the best in many. One aspect of KiwiSaver that I’m enjoying is the way people are helping one another understand it. This came through in several entries to our giveaway of my book “KiwiSaver: How to make it work for you.” Entrants had to say in 40 words or less why they should win one of 30 copies of the book. Some wanted it book to help their children, some their parents and some their workmates.

Misunderstandings about KiwiSaver abound. Predictably, given that KiwiSaver is new, complex and not yet fully formed, there are many misunderstandings about it.

Sack the inaccurate journalists. A reader reports that she and her family “were quite astounded to find you recommend (KiwiSaver) so unreservedly.” “I’ve read several articles recently by other journalists, who have pointed out that one’s savings could well be handled — in the interim before one retires — so poorly that there could be none left to collect on retirement.