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KiwiSaver Scheme

KiwiSaver is a New Zealand Government initiative designed to encourage New Zealanders to save for retirement. It costs nothing to join.

Potential Government subsidies amount to many thousands of dollars even for those with only a few years to age 65 at which stage eligibility ceases. This is a once in a lifetime opportunity not to be missed and one that should withstand any change of government.

Everyone eligible for KiwiSaver should seriously consider joining - that is, those qualifying for permanent residence in New Zealand and under the age of 65, irrespective of employment status. Children stand to enjoy significant benefits early in life through the first home subsidy as well as establishing an important financial base for eventual retirement. Parents should enroll children as soon as possible to attract maximum benefits.

There are about 33 Kiwisaver fund providers from which those eligible to join the scheme are free to select the fund provider of their own choice.

Because KiwiSaver is intended to be a long term savings plan aimed at accumulating a substantial individual retirement fund for each member, choosing a KiwiSaver fund manager capable of providing an ongoing stream of good investment returns over many years is essential.


Vital to Dump Bad Kiwisaver Fund Managers

Sticking with a bad Kiwisaver fund provider could well cost you the retirement you dream of. Make no mistake, Kiwisaver is a long term savings scheme with a high target. Ongoing good returns over the life of your fund are essential to accumulate the significant nest egg you will need to maintain the standard of living you want in retirement. Above average investment returns can make a huge difference to individual benefits from the scheme over a term of 10, 20, 30, 40 years or even longer. Poor or even negative returns will cost you dearly.

Kiwisaver commenced on 1 July, 2007, just as New Zealand and global sharemarkets approached their peaks prior to commencement of one of the most severe sharemarket crashes ever recorded - from October 2007 to March 2009 - and the Global Economic Crisis. Nearly all Kiwisaver schemes were caught to a greater or lesser extent in those savage market falls, with the earlier schemes generally being more fully invested early on and therefore suffering the largest losses. Fund providers commencing business nearer the start of the crash were generally fortunate in holding more cash and having the chance to hold on to it as markets collapsed - thereby avoiding the worst. Government and employer subsidies however, continued to make the scheme attractive to new members despite the decline in fund asset values.

In March 2009 all that changed. Local and global sharemarkets began the mother of all recoveries as forward indicators predicted the Global Economic Crisis was starting to wane, thanks largely to massive injections of government bailout and stimulus cash being pumped into the world economy by numerous central banks working in concert.

All Kiwisaver fund managers offering "Growth" and "Balanced" fund options should have a large allocation of investor funds to equities and should therefore have been able to benefit significantly from the ensuing strong market rebound over the following six months to 30 September 2009.

Unfortunately that has proven not to be the case.

While start timing differences make direct fund comparisons unfair during the October 2007 to March 2009 crash, direct comparison of performance between funds since March 2009 is much more valid as nearly all fund providers were, by then, well established and in a position to catch the recovery.

The failure of some Kiwisaver fund providers to benefit from such a strong and extended market rise provides a woeful commentary on their ability to manage an investment fund at all. It turns out that some very high profile fund providers have actually been amongst the worst performers - losing client funds heavily during the crash but failing to benefit from the recovery. Collecting big fees while costing clients dearly - some now appear to be resorting to public attacks on successful managers in order to divert attention from their own shortcomings.

If you find yourself in the unfortunate position of having joined such a poorly-performing scheme you must act now to protect your own interests. Switching scheme providers is easy.

Just a few percentage points difference in return per year over the life of your Kiwisaver fund can make a huge difference to your final return and hence the quality of your retirement. The following chart highlights that a Kiwisaver fund receiving total contributions of $3000 per year (from all sources) for 40 years and compounding at 7% per annum will accumulate to a final value of more than three times the amount of a fund with the same inputs but growing at only 2% per year.


To evaluate the performance of your own current Kiwisaver fund provider simply check your results against the following criteria:

  • Check your personal Kiwisaver account unit value as at 30 September 2009 against your personal unit value at 31 March 2009. A "balanced" fund should have been able to achieve a unit value increase of at least 8% during this time while a "growth" fund should have achieved at least 12%. Publishing results in unit value form is important as unit values allow you to evaluate ongoing fund provider performance irrespective of your contributions timetable. Be very suspicious of fund managers who do not publish (or even provide) a unit value as such failure can be used to disguise poor results.
  • If your personal Kiwisaver account has benefitted little or not at all during this extended period of such strong investment market returns, your fund manager appears to have neither the investment ability nor systems in place to warrant your continued support. In your own interests a change is essential.


  • Changing Kiwisaver fund providers is easy. For your own sake, get a good one.

    Canopus can assist in making a suitable choice of provider. Contact Canopus: info@canopus.co.nz


    For those not yet in Kiwisaver - the quicker you join the quicker you will receive the additional benefits avaliable from ongoing savings, investment returns, Government "tax credit" subsidies up to $521 per year, employer contributions and access to first home owner benefits.

    For more information contact Canopus: info@canopus.co.nz



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