NZ Herald 19 September 2020

AThat’s wonderful news. Your letter got me wondering how many other readers might also be receiving less NZ Super than they are entitled to.

So here’s a list — with help from the Ministry of Social Development and Inland Revenue — of how much most people on NZ Super should receive in their bank accounts each fortnight:

A single person living alone gets $981.46 before tax.

After tax it’s:

• $847.66 if NZ Super is your only income, or you get more from NZ Super than from wages or salary.
• $809.96 if you get less from NZ Super than from wages or salary, and your total income from NZ Super and wages and salaries is less than $48,000.
• $687.46 if that total is $48,001 to $70,000.
• $658.06 if that total is more than $70,000.

For a couple who both qualify, each person gets $744.54 before tax.

After tax it’s:

• $652.04 if NZ Super is your only income, or you get more from NZ Super than from wages or salary.
• $614.34 if you get less from NZ Super than from wages or salary, and your total income from NZ Super and wages and salaries is less than $48,000.
• $521.34 if that total is $48,001 to $70,000
• $499.02 if that total is more than $70,000.

From 1 May to 1 October, superannuitants also get the winter energy payment, which was doubled this year because of Covid-19. Singles get $81.82 a fortnight and couples or people caring for children get $127.28. Note that that will be ending in a couple of weeks.

What if you’re in another situation, such as a single person sharing accommodation or a person in a partnership with a non-qualified partner included in their NZ Super? You can find out which tax code applies to you here. Then go here to find out the amount that should be coming into your bank account.

If you find you are receiving the wrong amount, or if your income changes, you “need to advise MSD and complete an IR330 tax code notification,” says an Inland Revenue spokesperson.

She adds, “Of course, some superannuitants may also have other deductions such as student loans (if they meet the threshold), and that would need to be taken into account.”

Let’s hear from anyone else who discovers they also have a few thousand dollars coming to them!

Along those lines, see today’s third Q&A — another happy one.

ANo. There’s no tax on the money you take out of KiwiSaver.

You’ve already paid tax on the earnings — usually interest and dividends — within your KiwiSaver fund. Your provider takes care of that. So withdrawing money is just like taking it out of a bank account, as far as tax is concerned.

AIt certainly is when you’re saving. It’s not so good when you’re borrowing — as people struggling to pay their debts will have noticed.

But in your case, it’s all positive. At the risk of being a wet blanket, I feel I should point out that your investment has not made huge returns. The “return on investment calculator” on calculator.net tells us you got just under 4 per cent a year after fees and tax.

Still, some of those decades-old investments charged horribly high fees, so you did pretty well. Getting $45,000 out of the blue must have been a lovely surprise.

AIt seems not.

With all the types of mortgages mentioned, the borrower reduces their mortgage debt by amounts they have in the bank. That means they pay less interest.

But with an offset loan you can include family bank accounts — although those accounts earn no interest. And some people find it easier to manage their money than with, say a revolving credit mortgage.

Back in that 2016 column I said, “customers who would like the offset option should keep asking. That’s how things get changed.” But there have been no changes, at least so far, at ASB or ANZ.

Says ANZ: “We acknowledge that some home loan customers in the New Zealand market utilise an offset mortgage, but it’s not in our immediate plans given a number of other priorities, which have increased in the current environment.”

And from ASB: “Currently, we have no plans in the short term to introduce an offset mortgage product. ASB’s revolving credit home loan products can meet the majority of needs that customers look for in an offset mortgage, including using credit funds against their home lending to reduce interest costs and help pay down the loan faster, and allowing redraw of those funds when needed.”

AAn ANZ spokesperson points out that they have information on their website for overseas customers.

It includes, “If you do not have MyBonusBonds you can have the proceeds deposited to any NZ account, or sent to an overseas bank account.” It then tells you how. There’s a $28 fee plus possibly other fees.

The spokesperson adds, “With regards to the issue of a customer with a low balance who doesn’t have NZ accounts and doesn’t wish to remit the funds overseas, they can pay the funds to someone with a NZ bank account (e.g. the mother in this case).

“Another option for overseas customers needing to close accounts but having balances less than the cost to transfer — or anyone for that matter — is to donate their balance to the Cancer Society, which ANZ supports. Customers just need to give us a written instruction and we can make the payment on their behalf.”

That might be a good option for many with small amounts in Bonus Bonds.

Another reader with overseas children who hold Bonus Bonds commented, “I would have loved them to come for a holiday and collect the money, but this is out of the question with Covid-19 in the world.” Sad but true.

ASays a Financial Markets Authority (FMA) spokesperson, “We note that ANZ has a list of FAQs on its website regarding Bonus Bonds.” That includes this: “As we currently have more than $1 of assets for every Bonus Bond issued there is a reasonable chance that people will receive slightly more than $1 per unit in a wind up, however do note while we don’t expect to pay less than $1 per Bonus Bond it is possible that the price could be slightly less than $1.” That gives you a pretty good idea.

The FMA spokesperson continues, “ANZ has indicated that the final pay-out will depend on a number of uncertain factors, such as the realised value of the investments, the cost of winding down the scheme and the number of bond holders who decide to redeem their bonds prior to wind-up.

“The audited financial statements of the scheme are due by the end of September, which will provide bond holders with more information regarding the value of the reserves.”

He adds that ANZ has been keeping the FMA informed over its Bonus Bonds decision. “ANZ has assured us that customers’ interests have been foremost in its decision making.

“We have asked ANZ to consider the impact of closure of the scheme in the current environment, particularly as this relates to potentially vulnerable customers, and those who may require support to identify suitable alternative use for their funds when their bonus bonds are redeemed.”

During the FMA’s conduct and culture reviews of New Zealand’s banks, “we raised the issue of legacy products that are potentially low value for customers and asked all providers to review legacy products with that in mind. We understand ANZ’s decision regarding Bonus Bonds is not directly linked to current legacy product reviews.”

He concludes, “We will continue to monitor progress and engage with ANZ and its supervisor as the wind-up progresses.”

ADon’t hold your breath.

“Bonus Bonds had certain exemptions that allowed it to operate within the current regulatory regime (FMC Act),” says the FMA spokesperson.

“The FMA has not performed an analysis as to whether a similar scheme could be launched under the current regime. However, such a proposition would face the same economic circumstances (i.e. low interest rates) and lack Bonus Bonds’ benefits of scale.”

Next week we’ll look into what you might do with your Bonus Bonds money.