NZ Herald 4 October 2014

AYou’re not alone. Thousands of people have been auto enrolled into KiwiSaver when they got a new job, and haven’t taken much notice of it since. You might be happily surprised to learn how much is in your account — perhaps to help you buy a first home. More on that later in this column.

If you haven’t heard from your provider in years, it’s probably because you’ve moved and not given them a forwarding address.

At least once a year, every provider must send their members a statement showing their account balance, the fees they’ve paid, and contributions from them, their employer and the government. Some providers actually do this every three months, and I think they all should.

Your statements are probably languishing in a letterbox, or in a “Gone No Forwarding Address” pile, and I expect your provider will be pleased to get you out of that pile. So how do you do that?

The website www.kiwisaver.govt.nz, which is run by Inland Revenue, addresses your problem: “Can’t remember who your scheme provider is? Register for My KiwiSaver or phone us at 0800 KIWISAVER (0800 549 472)”

What would happen if you rang that number? It’s easier if you’ve got your IRD number available. If so, you’ll be asked “set questions to ensure the call taker is talking to the correct person,” says an Inland Revenue spokeswoman.

“If validation is passed then any questions she has on her own account will be answered, including who her scheme provider is. Any information that requires updating on her IRD records will be done at this stage. She will need to contact the scheme provider to get her details updated with them.”

If you don’t have your IRD number, you’ll be asked questions about yourself to establish what your number is.

All this got me curious. What info does Inland Revenue have about us? Apparently from the time we first get an IRD number — perhaps when we get our first job — we tell the department our full name, address, phone number, date of birth and so on.

They may also have on file our main source of income, previous street address, bank account number, previous employer — that sort of thing.

I suppose this just sounds like a nagging parent, but you’ll make life easier in future if you tell your provider and Inland Revenue when you change addresses.

AIt’s weird the way the commentators and media seem to concentrate on our exchange rate with the US dollar.

If they want to discuss just one number, it would make more sense to concentrate on the Trade-Weighted Index, or TWI, which measures the value of our dollar against the currencies of all our major trading partners.

The TWI is the Reserve Bank’s “preferred summary measure for capturing the medium-term effect of exchange rate changes on the New Zealand economy and inflation.” But perhaps it just doesn’t sound as sexy as America’s greenback.

The fact is that the TWI also fell early this past week, although by my midweek deadline it was rising again. And that’s because the Kiwi fell, and then recovered somewhat, against pretty much all the major currencies. There was no drag effect.

If you want to follow the different currency movements, there are several websites with graphs. But I wouldn’t bother. It won’t tell you anything useful about what will happen next.

So what should you do? There are two sensible strategies:

• Buy some foreign currency every few months — preferably in a way that gives you interest on the money before you travel.
• Accept whatever the exchange rates are when you travel and concentrate on enjoying your holiday. Chances are they’ll still be a lot better than five or ten years ago.

AGood news — your partner can withdraw KiwiSaver money to buy his first home, as long as he’s been in KiwiSaver for at least three years.

You’re confusing the two types of KiwiSaver first home assistance, which are:

• Savings withdrawal — withdrawing the money you and your employer have contributed, plus all returns. Currently you have to leave the $1000 kick-start and all tax credits in the account — but if you apply for the withdrawal on or after April 1 2015 you can also withdraw the tax credits. There are no income or house price limits. And while you have to be in KiwiSaver for three years, there are no rules about how long you have contributed.
• Deposit subsidy — receiving a subsidy of $3000 per person after three years in KiwiSaver, $4000 after four years or $5000 after five or more years. What’s more, if you apply for the subsidy from next April and you buy a newly built home, you’ll get double the subsidy. You have to have contributed to KiwiSaver for at least three years at the minimum percentage of your income and you need a deposit of at least 10 per cent of the house price.

For the subsidy, there are house price caps, currently ranging from $485,000 in Auckland down to $300,000 in other regions. From April 2015 these rise to $550,000 in Auckland, $450,000 in Wellington, Christchurch and some other areas, and $350,000 elsewhere. There are also income caps, set at $80,000 for one buyer and $120,000 for two or more buyers. For details, see www.my-first-home.co.nz.

Why the income caps for the subsidy? I suppose because the government is giving away taxpayer money, and realizes most of us wouldn’t support handouts to the wealthy. Will the caps change? Probably, over time, to roughly keep pace with inflation.

If your partner is hell-bent on getting the subsidy despite his income, he could indeed quit work.

But starting a loss-making business to reduce his income wouldn’t work. If he still earned $100,000 from his main job, this amount would not be reduced by the loss made in his loss making business.

Your other idea, of buying with a non-earner could work, provided evidence is supplied showing the other purchaser earns no income.

Keep in mind, though, that we’re talking $5000 in most cases. It’s not to be sneezed at, but is it worth taking drastic steps to get it?

On your final question, read on.

AThere’s good news for you too. Your boyfriend can apply to withdraw his KiwiSaver money to buy a home with you — or anyone else who has previously owned a home.

“Eligibility is based on the KiwiSaver member’s circumstances, not the additional purchaser. However, they would need to discuss this directly with their KiwiSaver scheme provider, who will manage the withdrawal process and advise them of the eligibility criteria,” says Matthew Smith at Housing NZ.

What about a first home subsidy — assuming your boyfriend is eligible for one?

“It is no different from someone applying to buy a home with another purchaser who has not previously bought a home,” says Smith. “The eligibility for the subsidy is based on the KiwiSaver member’s circumstances, but we would require the income certificates for the last 12 months for both named purchasers.

“As the other purchaser is not applying for the subsidy and is just a co-purchaser, all we require from them is their name, date of birth, employment type and income for the last 12 months. To qualify, the combined income needs to be $120,000 or less for the previous 12 months.”

AI don’t know if this is a good time to buy, but probably nobody does. Property prices are almost as hard to predict as exchange rates. And if anyone knows how unexpected changes can affect property values, it’s Cantabrians!

Therefore, I think it’s best to buy a home whenever it suits you. And it seems you’re ready to go. Note, though, that the Christchurch price cap for the first home subsidy will rise to $450,000 from next April, so you might want to wait until then — although I agree that it’s good not to take on a large mortgage.