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Scoop
24-05-2025
- Business
- Scoop
Budget 2025: What Will KiwiSaver Changes Mean For Your Balance?
An increase in default KiwiSaver contribution rates announced in Thursday's Budget could leave KiwiSaver members more than $100,000 better off at retirement - but there is a warning that not everyone will benefit. As part of the Budget, a number of changes were announced to KiwiSaver. The government will halve the member tax credit available to people who contribute at least $1042 in a year to $260.72. When the scheme was first launched, the government provided a matching $1042. The cut is expected to save the government $400 million a year. Employer and government contributions will be made available to 16- and 17-year-olds. Previously, they had only applied to those aged 18 to 65. The default contribution rate for both employees and employers will increase in two stages to 4 percent from 1 April, 2028. Employees can opt to stay on the lower 3 percent rate, matched by their employer, but that will reset to the new default rate after 12 months. Impact of higher contributions KiwiSaver managers estimated that the increase to a default contribution rate of 4 percent, plus 4 percent for an employer, would make a material difference to KiwiSaver members' final outcomes. Murray Harris, head of KiwiSaver at Milford, calculated that someone who was 35, earning the average wage with a KiwiSaver balance of $25,000 in a balanced fund, could have an extra $56,000 (inflation adjusted) at 65. That would give them $50 a week more to spend, he said. At Sharesies, general manager of funds Matt Macpherson said without adjusting for inflation, the increase for a 30-year-old currently earning $75,000 a year with $30,000 saved in a growth fund would be $175,000 at 65. Harris said the increase would help to close the gap between what it cost to live in retirement and what NZ Super would provide. But he said it would have been good to see contributions extended to people over 65, as well as teenagers. Some KiwiSaver providers said the increase was not likely to be enough. Kōura founder Rupert Carlyon said 4 percent plus 4 percent was better than 3 percent plus 3 percent. "But it's well short of six plus six, which would have brought us in line with Australia, and it's nowhere near the 15 percent OECD average pension contribution. We have a long way to go, but it's better than nowhere." Dean Anderson, founder of Kernel Wealth, said the government should have followed Australia's lead and set a path detailing how contributions would increase over time. "I don't know why we couldn't have gone further, with a long-term plan." Carlyon said he was worried by stats showing that half of employers used a "total remuneration" approach to KiwiSaver. This means that rather than providing a contribution on top of a person's salary, they are offered a total salary amount and the employee decides whether to contribute to KiwiSaver from that total. Carlyon said he was worried this would become more common as a way for employers to avoid the additional contribution. "This is probably net positive for balances over time, but not for everyone - only a select group of people who have employers who do the right thing." Reduction in member tax credit Macpherson said the impact of the smaller tax credit could compound out to $21,000 less for the 30-year-old earning $75,000 that he used as an example for the higher contribution calculation. He said some people were being left behind, "in particular self-employed". He said he saw many self-employed people contributing to Sharesies' scheme at the level to get the member tax credit - they would now have their returns reduced. Retirement Commissioner Jane Wrightson said low-income earners, Māori, women and self-employed people would be hit hardest by the reduction. "It's a shame there are so few government incentives for a scheme that underpins private saving for retirement. I would at least have liked to see some of the savings from reducing government contributions be applied to serving those groups where we see the widest retirement savings gaps." But other providers said the impact of the credit was not material for most KiwiSaver members. Anyone who was earning at least $50,000 a year and contributing 3 percent would have received the full payment. "As much as I hate to see tweaking to KiwiSaver and removing incentives erodes confidence, when you're looking to find balance in the economy and make a saving, on a cost benefit basis, it's probably okay."
Otago Daily Times
22-05-2025
- Business
- Otago Daily Times
What will KiwiSaver changes mean for your balance?
By Susan Edmunds of RNZ An increase in default KiwiSaver contribution rates announced in Thursday's Budget could leave KiwiSaver members more than $100,000 better off at retirement - but there is a warning that not everyone will benefit. As part of Finance Minister Nicola Willis' Budget, a number of changes were announced to KiwiSaver. Budget KiwiSaver changes: What you need to know The government will halve the member tax credit available to people who contribute at least $1042 in a year to $260.72. When the scheme was first launched, the government provided a matching $1042. The cut is expected to save the government $400 million a year. Employer and government contributions will be made available to 16- and 17-year-olds. Previously, they had only applied to those aged 18 to 65. The default contribution rate for both employees and employers will increase in two stages to 4 percent from 1 April, 2028. Employees can opt to stay on the lower 3 percent rate, matched by their employer, but that will reset to the new default rate after 12 months. Impact of higher contributions KiwiSaver managers estimated that the increase to a default contribution rate of 4 percent, plus 4 percent for an employer, would make a material difference to KiwiSaver members' final outcomes. Murray Harris, head of KiwiSaver at Milford, calculated that someone who was 35, earning the average wage with a KiwiSaver balance of $25,000 in a balanced fund, could have an extra $56,000 (inflation adjusted) at 65. That would give them $50 a week more to spend, he said. At Sharesies, general manager of funds Matt Macpherson said without adjusting for inflation, the increase for a 30-year-old currently earning $75,000 a year with $30,000 saved in a growth fund would be $175,000 at 65. Harris said the increase would help to close the gap between what it cost to live in retirement and what NZ Super would provide. But he said it would have been good to see contributions extended to people over 65, as well as teenagers. Some KiwiSaver providers said the increase was not likely to be enough. Kōura founder Rupert Carlyon said 4 percent plus 4 percent was better than 3 percent plus 3 percent. "But it's well short of six plus six, which would have brought us in line with Australia, and it's nowhere near the 15 percent OECD average pension contribution. We have a long way to go, but it's better than nowhere." Dean Anderson, founder of Kernel Wealth, said the government should have followed Australia's lead and set a path detailing how contributions would increase over time. "I don't know why we couldn't have gone further, with a long-term plan." Carlyon said he was worried by stats showing that half of employers used a "total remuneration" approach to KiwiSaver. This means that rather than providing a contribution on top of a person's salary, they are offered a total salary amount and the employee decides whether to contribute to KiwiSaver from that total. Carlyon said he was worried this would become more common as a way for employers to avoid the additional contribution. "This is probably net positive for balances over time, but not for everyone - only a select group of people who have employers who do the right thing." Reduction in member tax credit Macpherson said the impact of the smaller tax credit could compound out to $21,000 less for the 30-year-old earning $75,000 that he used as an example for the higher contribution calculation. He said some people were being left behind, "in particular self-employed". He said he saw many self-employed people contributing to Sharesies' scheme at the level to get the member tax credit - they would now have their returns reduced. Retirement Commissioner Jane Wrightson said low-income earners, Māori, women and self-employed people would be hit hardest by the reduction. "It's a shame there are so few government incentives for a scheme that underpins private saving for retirement. I would at least have liked to see some of the savings from reducing government contributions be applied to serving those groups where we see the widest retirement savings gaps." But other providers said the impact of the credit was not material for most KiwiSaver members. Anyone who was earning at least $50,000 a year and contributing 3 percent would have received the full payment. "As much as I hate to see tweaking to KiwiSaver and removing incentives erodes confidence, when you're looking to find balance in the economy and make a saving, on a cost benefit basis, it's probably okay."
Sky News AU
13-05-2025
- Politics
- Sky News AU
Liberals did not ‘appeal' to women during election
News Corp Senior Writer Patrick Carlyon claims the Liberal Party does not 'appeal on any level' to women. 'I think the Liberals have a massive issue with women at the moment,' Mr Carlyon told Sky News host Rita Panahi. 'I don't know any woman under the age of 40 who voted Liberal, to be honest. 'It did not feel like a party that represented women's best interest, especially with the work-from-home stuff. 'They do need to be seen to making moves towards appealing to women.'
RNZ News
04-05-2025
- Business
- RNZ News
'How he invests is completely different' - NZ fund manager takes lessons from a legend
Warren Buffett is set to retire from his role leading Berkshire Hathaway. Photo: AFP There were lots of lessons for local investors at Warren Buffett's annual shareholder meeting in Omaha, a NZ fund manager says - but whether the average person can follow through on them is another thing entirely. The legendary investor announced at the weekend that he would retire from his role leading Berkshire Hathaway. Buffett transformed Berkshire Hathaway from a medium-sized textile company when he bought it in the 1960s into a giant conglomerate, now valued at more than US$1 trillion (NZ$1.68 trillion) and with liquid assets of US$300 billion (NZ$505 billion). Koura founder Rupert Carlyon was at the meeting and said Buffett explained how to be a good investor in the clearest way he had ever heard. He said Buffett made it clear that it was important to be patient and wait for opportunities. "Don't invest because you've got the money but because you've got the right idea." Carlyon said retail investment platforms might give people the idea that investing was easy and that they only needed to find companies that had had a share price fall to spot an opportunity. "How he invests is completely different. "When I listen to him, his story about investing is about patience and a hell of a lot of work… he's also clear that if you're not willing to be patient, if you're going to be emotional, you should find yourself a fund. "If you're emotional about money, get out of the room. If you can't check your emotions, you can't be an investor. If you can't read a balance sheet and understand a balance sheet, you're always going to lose. I can see why he's been so successful. The big question is whether other people can replicate what he does and often the answer is no. "Even if you look at the financial world no one can be anywhere near as patient as he is." Carlyon said Buffett would sit on cash for a long time while he waited for the right opportunity. While he would rather not have as much cash as he currently does, he did not see the opportunity to invest it. "If he has to wait five years to spend it, he doesn't care. He said the problem with fund managers is we're all incentivised to put money to work… he was digging at traditional investors trying to get as many assets under management as possible, trying to put cash to work as quickly as they can so they can charge a fee for it… he'll put it to work when it makes sense, not so he can earn a fee from it." Carlyon said Buffett was clear that most people were best to put their money into a managed fund or index fund and leave the investing to someone else. Buffett told the crowd that he was not worried about quarterly or even annual numbers, but was instead thinking about where the investment would be in 10 or 20 years. He said people who focused on short-term numbers typically became unstuck at some point. Carlyon said Buffett also told the conference Berkshire Hathaway had made a lot of money out of holding dry powder waiting for a downturn. "We need to stay patient, we don't know when it will come, but we know it will come. " Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Sky News AU
22-04-2025
- Politics
- Sky News AU
‘Jeopardy in our homes': Questions over Victoria crime crisis amid election campaign
News Corp Senior Writer Patrick Carlyon comments on crime being a major issue in the federal election. Mr Carlyon claimed crime has worsened to the point where Victorians are in 'jeopardy' in their own homes. 'There was a poll I think back in January that showed that climate change as an important issue that dropped off, safety, public anxiety about safety had gone up 10 per cent or something,' Mr Carlyon said. 'I don't think you're going to lose any votes by doing this are you – and it does actually, in places like Victoria, is does tap into that sense that the state government has been so weak in crime, that we are actually in jeopardy in our own homes. 'It is something that can be exploited, I don't think it's going to lose any votes, and it will be interesting to see how it plays out.'
