Monthly Archives: September 2014

Election Dust settled! What now for retirement income issues

Now that the election dust has settled, what holds for retirement income issues? Kaspanz expects and hopes that the following will take place

1. Government adopts a steady as it goes approach and resists interference or change in New Zealand Superannuation or Kiwi Saver policy. Kaspanz accepts nothing ever stays in concrete for ever, but the principle of resisting change for change sake, knee jerk reactions, silly ideas and that historical political problem of one or two people feeding of an idea, and then acting as if there is a mandate for change, does not occur.

2. Government to resist Peter Dunne’s Flexi superannuation idea, which is superficially attractive but is unsound.

3. Media commentators like Fran Sullivan, New Zealand Herald is just one of many of the media commentators already drum beating about rising the age of New Zealand Superannuation. She like the others should be praising the model NZ operates (everyone else in the world does). The discussion of age eligibility and length of residency entitlement discussions cannot be hidden away, but the conversation should take place in the context of reinforcement of the soundness of New Zealand Superannuation and Kiwi Saver schemes, that there is no urgency re this topic, and final decisions must be signalled well in advance of any charge, if evidence related policy emerged that a change is required.

Well in advance for age change entitlement is a minimum of 15 years notice with incremental steps over 15-30 yrs. one approach. Always remember a change in age to 67 entitlements as some suggest, actively works against women, Maori and low income groups

4. Government to act on a section 70 review and to also address the issue of the taxation applicable to annuities. A solid base of information supports both suggestions, and it’s time actions to address the matters takes place.

5. Financial Services Council “Fair Tax for Savers Policy” needs further analysis and discussion

Posted By Alec Waugh-Chairman

Posted by Alec Waugh

How much is to much when it comes to fees?

A CASH COW FOR MANY SUPPLIERS OF SERVICE, EATING AWAY AT YOUR SAVINGS RETURN.

Fees on your savings are the silent killer, re maximising your returns. The website Sorted NZ www.sorted.org.nz has an excellent website on Kiwi Saver funds. It’s simple, well presented and it’s really worth your time looking at what it offers.

On August 19th 2014 I scrolled through the Kiwi Saver Conservative funds fees listing, and they showed ASB Kiwi Saver Conservative Fund (default) had the lowest fees of 0.75%

Fidelity Kiwi Saver Conservative Fund at 1.71% was at the other end of the list.

I happen to be in the Westpac conservative Fund and the listing showed *below is an example of how the sorted website presents its information

My reading of Conservative Fund costings over the last few months has me thinking, that this type of total product fee should be in the vicinity of .50 to 1%

Linked to the fees issue is the remuneration of staff working in the Management funds industry. A cone of silence prevails on this topic, off shore commentators are increasingly saying the remuneration of people in the banking and management funds area is over the top, and needs attention, and the setting of reasonable fees, requires more transparency and discussion.

What’s your view?

EXAMPLE

*The Westpac Kiwi-Saver Scheme Conservative Fund aims to provide stable returns over the medium to long term with low levels of volatility and investment risk. Returns will vary and can be low or negative at times.

Combined fees

This fund

1.10vs

Average

1.27%

The combined fees are how much you would have been charged for the year ended 31 March 2014 on the average Kiwi Saver balance.

All the averages you see are for this same type of fund, so you’re comparing apples with apples.

Combined fees include

Membership fees per year

This fund

$31.08

Average

$31.00

Here you’ll find the total breakdown of the combined fees. These don’t include other fees such as for switching or withdrawing.

+ Total fund fees

This fund

0.72%

Average

0.87%

Annual management fee

0.54%

0.66%

Performance-based fees

0.00%

0.00%

Other fees and costs

0.18%

0.20%

Your Kiwi Saver money is invested by a professional fund manager, so there are always fees to pay. Fees can have a big impact on your nest egg, especially in the long run, so it pays to keep a close eye on how they add up.

Combined fees example

On a conservative fund of $8,100 the annual fees would be approximately:

This fund

$89.40

Average

$102.87

Posted by Alec Waugh