NZ Herald 6 September 2025

ANo, it’s not you! You’re quite right that there has been little coverage since the scheme took effect on July 1. Although this column included several Q&As earlier in the year, questions haven’t come in lately. Nor has there been much coverage in other media.

So it’s time for a reminder on this important issue.

Under the Depositor Compensation Scheme (DCS), if you have money in an everyday account, savings account, term deposit or similar, and the deposit taker goes belly up, you will get up to $100,000 back.

The scheme does not cover KiwiSaver accounts or other investment funds, with the exception of cash PIE accounts that invest only in a bank’s own debt.

The range of deposit takers covered may surprise some people. It includes not just banks but also several credit unions, building societies and finance companies.

A list of those covered is on the Reserve Bank website. You can find it here. That page includes a link to each deposit taker’s website where the covered deposits are listed. So if you’re in doubt, it’s easy to check.

And, as our correspondent says, there’s also other easy-to-read info on the scheme on that website.

Note that the $100,000 compensation covers all your accounts with a provider, added together. Let’s say you have $40,000 in a savings account, $10,000 in an everyday account and $80,000 in term deposits — so that your total is $130,000. Only $100,000 of that is covered.

If you have a joint account, half the total is allocated to you and half to the joint holder.

The scheme is run by the Reserve Bank, but funded by levies paid by the deposit takers.

Now that the DCS is operating, some steps readers might want to take:

• If you have more than $100,000 in the types of accounts that are covered, spread your money over several deposit takers. It’s not a bad idea to do that anyway, as providers compete on interest rates. A good source of info on rates is interest.co.nz.
• You may want to put some of your money in the riskier providers, such as finance companies, that tend to pay higher interest — now that you won’t lose the money if the provider fails. Note, though, that if that happens it may take a while for you to get your money.

AYou raise a really good point, which I put to the experts at the Reserve Bank.

“Deposit Takers licensed by the RBNZ are automatically covered under the DCS and pay levies towards the DCS fund,” they said. “They do not have the option to remove coverage from protected products.

“Depositors can rest assured that their money is protected by the DCS — up to $100,000 per eligible depositor, per deposit taker — when their money is held in DCS-protected accounts such as transaction and savings accounts and term deposits.”

ALast week’s correspondent, who said in a postscript that’s he’s otherwise happy working at ANZ, is not greedy. He just wants a fair deal for himself and his colleagues.

He was writing about the fact that ANZ, the biggest KiwiSaver provider, uses total remuneration. That means that employer contributions to KiwiSaver are basically taken out of employees’ pay.

I’m comfortable with the inequality in your hypothetical company. KiwiSaver is designed to encourage people to save for their retirement by giving them incentives to save. That means they will be better off than those who don’t take part.

It’s fair enough that Adam and other non-residents of New Zealand don’t receive the same benefits. That’s probably true in every other country, too. If Adam wants the privileges, he needs to become a resident.

Bobby is in a sad situation because of New Zealand’s policy on subsidising cancer drugs. He and his family probably have to do without many other nice-to-haves too. That’s not fair, and the government needs to change the policy. But it’s not a KiwiSaver issue.

Meanwhile, though, I would like to think the employer might continue its contributions to Bobby’s KiwiSaver. There’s nothing to prevent that.

As for Dave, the older worker, see the next Q&A.

On your point about the original KiwiSaver briefing papers, various views were expressed as the scheme evolved. I’m happy to go with the Retirement Commission’s interpretation, which I quoted last week. It says total remuneration goes against the “spirit” of KiwiSaver.

Oh, and while we’re talking about equity and fairness, it sounds as if your hypothetical employer might be a bit dodgy on gender equality — although I suppose Charlie and Bobby might be women!

AI have mixed feelings about this issue. It seems mean if an employer suddenly stops its KiwiSaver contributions when an employee turns 65, and I know that many employers don’t do that. But legally they can.

Still, you make a good point. In almost all cases — except for people on really high pay — the extra income from NZ Super would more than cover the lost employer contributions.

AGosh, that’s a healthy pension balance. It shows how large contributions can really grow over the years.

I think the main point you’re making is that, with total remuneration, employees can be tempted at the start of their job, or later, to take the employer money in the hand instead of putting it into KiwiSaver.

In contrast, in the more usual situation, the employer’s KiwiSaver contribution can’t be taken as cash. And in the long run, the employee is better off.

ASelf insurance for health costs is a lot better than nothing. You set aside perhaps the amount you would have paid in premiums — or at least a considerable regular amount — to meet health costs as they come up.

It can work well — as long as you don’t run into major expenses early on, or lots of expenses in total.

One common problem is that people end up using the set aside money for some other unexpected cost. So your idea of ringfencing the money in a separate fund makes sense.

Readers can do that with any lower-risk fund outside KiwiSaver. Or, if you’re over 65, it could also be a KiwiSaver fund.

ALucky you — and everyone like you who has done just fine without health insurance.

With any type of insurance, there will always be uninsured people who “get away with it”. But there will also be those who really regret their decision. So much is down to luck.

If you own a house, you probably insure that against a major loss, such as a big fire, flood or landslide. The chances of a disaster happening are low, but you’re not prepared to take the risk. And yet you do with your health.

True, there’s not as much government support for those who lose their homes as for those with major health problems. But sadly, our public health system is strained. There are many stories of uninsured people facing either a long delay or a large medical bill for private care — at the very time in your life when you don’t need that extra stress.

At the risk of sounding mean, I just hope you continue to be happy with your decision as you enter a stage in your lives when medical problems are more likely. Good luck!