You may have seen in the media that there are some changes coming for KiwiSaver that take effect from 1 July 2019.
Whilst KiwiSaver has always been positioned as a retirement savings account, with changing work patterns and increased longevity, KiwiSaver may represent an opportunity to continue saving and investing after 65. The change in the law will allow people over this age to now enrol in a KiwiSaver scheme providing alternative investment options.
Some reasons why people over 65 may wish to consider joining or rejoining KiwiSaver generally and the Summer KiwiSaver scheme specifically:
KiwiSaver may present an alternative to term deposits.
To follow is an example to show the potential return you may receive from term deposits:
|Tax at 28%||(1.0%)|
|After tax return||2.5%|
You can find information on Summers performance here.
When comparing returns on different investments it is always important to also compare risk.
Term deposits are relatively low risk investments. While the bank with which you place your funds could fail, term deposits will generally have a low risk of default and provide you a specified return for a set period of time. That certainty can be useful as an investor. Conversely, if you need to access your funds before the term deposit matures, you generally pay a penalty to do so and receive a lesser interest rate.
Investing in a KiwiSaver scheme is higher risk than a term deposit. Unlike a term deposit, a KiwiSaver account does not have a specified return and, if you join after 65, there is no set time frame for which you must invest. Instead your return will vary in line with market movements and the assets held by the fund(s) in which you invest. Being higher risk than a term deposit, the expected returns are also higher – but the returns could also end up being lower.
It is important to make sure you select the fund or combination of funds which best meets both your timeframe for investing and risk appetite. We have a short Summer KiwiSaver scheme Investment Profile tool here that can help you.
You can also ask us for advice on your KiwiSaver account at any time and we will arrange for a Forsyth Barr Authorised Financial Adviser to contact you.
Another way to think about risk
All managed funds (including KiwiSaver schemes) must have a risk indicator. A risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the fund’s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way.
You can see Summer risk indicators along with a summary of the investment objective and strategy on each fund page or in our Product Disclosure Statement.
Ready to join? Click the button below and have your IRD number and driver licence or passport handy. Once the form is complete, we'll take care of the rest, including getting in touch with your current provider. Easy.
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