Yovich & Co. KiwiSaver Market Update May 2019
May 15, 2019 | Commentary KiwiSaver
KiwiSaver Market News
It has been a volatile journey in the equity markets since my last newsletter in September 2018. This has naturally reflected in the performance of KiwiSaver Funds. OneAnswer KiwiSaver Growth Fund members benefited from a return of 10.1%, while the Conservative Fund investors received 4.1% for the March quarter. This has seen fund balances regain since the December quarter. KiwiSaver assets on the Morningstar KiwiSaver report grew $4.4m over the last quarter. It is great to see that more people are joining to gain the benefits of KiwiSaver, along with appreciation in unit prices.
One Answer KiwiSaver Scheme – Multi-Asset Class*
Sourced from: https://customer.anz.co.nz/kiwisaver/Investment/FundInformation/Pages/fundperformance.aspx*UPDATED AS AT 31ST MARCH. PERFORMANCE IS AFTER DEDUCTIONS FOR FEES BUT BEFORE TAX AND MEMBERSHIP FEES.
The New Stuff
From 1 April 2019 members have greater flexibility regarding their contribution rate. New rates of 6% and 10% are now available. These are great options for members wanting to increase their contribution, either for plans to purchase their first home or to increase funds at age 65. Also for members who wanted to contribute more than the traditional 3% and 4% but felt that 8% was too much of a stretch.
The other new change is that the Contribution Holiday is now known as Saving Suspension, with the maximum period of Savings Suspension being a one year period compared to the traditional period of 5 years.
A renaming of the Member Tax Credits to now be called Government Contributions.
From 1 July 2019 new members aged 65 plus will be eligible to join and use KiwiSaver as an investment fund. New members aged 61-64 who enrol after 1 July 2019 will no longer have to wait the traditional 5 year lock in period, and will have the option to withdraw their balance at age 65.
As part of looking after the best interest of OneAnswer KiwiSaver members, from 1 April 2019 the membership fee for investors under the age of 18 was removed. This is a great incentive to sign up the young people in your life on a path to savings. Members aged 18 and over have also had a reduction in membership fees from $2 per month to $1.50.
The importance of starting young
At a recent workplace presentation the audience were most amazed by the effect of starting young and seeing the effect of Compounding Returns.
The magic of compounding returns is interest earned on interest. The longer you are invested the greater the effect of the magic on your KiwiSaver balance, this provides more capital to purchase your first home or for your retirement.
How we can help
If you need any advice regarding KiwiSaver or an Adviser to present at your workplace, the Advisers at Yovich & Co are happy to be of assistance. As part of the service we have been contacting clients who need to top up their contributions to ensure that they will receive their free $541.43 Government Contribution. If you are unsure whether you will make this then do not hesitate to contact your Adviser.
Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company. Disclosure statements relating to the financial advisers associated with this newsletter are available on request and free of charge.
KiwiSaver Saving PPA Employers Agreement Government Contribution Homestart Grant First Home