Latest news with #SusanEdmunds
Otago Daily Times
9 hours ago
- Business
- Otago Daily Times
KiwiSaver hardship withdrawals boom
By Susan Edmunds of RNZ and Nine to Noon More than 50,000 people made withdrawals from their KiwiSaver accounts on the basis of hardship in the year to June - compared to about 18,000 five years ago. KiwiSaver provider Simplicity chief economist Shamubeel Eaqub said the increase started in 2023 and the reasons were easy to understand - the recession and cost-of-living crisis were putting ongoing pressure on people's budgets. "But some context - the number of hardship withdrawals were 1.6 percent members, and 0.3 percent of savings. The hardship, as is true for the wider society, is concentrated pain among a few." Sorted's personal finance lead Tom Hartmann told RNZ's Nine to Noon programme today it was likely the ability to withdraw from KiwiSaver was giving people "peace of mind" that if their situation worsened they could draw on their savings. The average withdrawal was $8800, he said. For someone in their 30s earning $75,000 a year, a withdrawal of that size in a year could reduce their not-inflation-adjusted final balance by about $40,000. Hartmann said there had not been an increase in savings suspensions, which indicated that the withdrawal was a temporary stop gap for people who would get back to making contributions. People can opt to stop contributing to KiwiSaver for a year at a time, and can renew the suspension at the end of the 12 months. The number of people on a savings suspension had dropped from 89,000 a year ago to 85,000. Hartmann said the key thing for people considering a withdrawal was to make it a last resort. "Typically, there are other sources of support that need to be explored first." Financial helpline MoneyTalks was one option, he said. "The team there have reporting seeing an increase in even middle-income people exploring their options." Eaqub said for people making a withdrawal, it was often a choice between "certain hardship today versus more savings later in life". But he said the situation was worse for those without KiwiSaver. "Many low-income people do not contribute to KiwiSaver because the employee contribution lowers their take home pay. "But they also miss out on the employer contribution and government subsidies. It means when non-contributors face hardship, they do not have this fallback." But Rupert Carlyon, founder of Koura KiwiSaver, said people on lower incomes could build up good balances. "Someone earning $60,000 contributing 3 percent will end be putting in [about] $3500 per year, so over 10 years plus returns that really adds up. "You can easily see a $60,000 salary becoming a $45,000 balance over 10 years. That is the power of KiwiSaver, we are often encouraging people to save that would not otherwise do it."
Otago Daily Times
3 days ago
- Business
- Otago Daily Times
Will changes to Working for Families leave people worse off?
By Susan Edmunds of RNZ An organisation representing financial mentors around the country is worried that proposed changes to the Working for Families scheme could leave some families worse off. As part of the Budget, the government said it would look at options to help avoid the issue of Working for Families debt. In the 2022 year, only 24 percent of households receiving weekly or fortnightly Working for Families payments and who were squared up by IRD at the end of the tax year had received the right amount of money. People who earned more than expected can end up with an overpayment debt that that they struggle to pay back. There is almost $300 million owed in Working for Families debt. A discussion document, on which submissions were sought, said the government's current thinking was that a quarterly assessment of Working for Families eligibility could strike the right balance between responsiveness, certainty and recipient effort. This would adjust what people were paid much more frequently. But Fleur Howard, chief executive of FinCap, said in a submission in response that she was worried that some families could be left without enough money. A shorter quarterly assessment period would be an improvement, she said, but it needed to be refined. "Aspects of the proposed design appear to suit some whānau situations better than others. We are concerned that in its current state, this design would have a disproportionally negative impact on those who are already experiencing financial instability due to more fluctuations in payment amount." She said FinCap's internal data showed most financial mentor clients had a weekly budget deficit even after they had received help. "More often than not, this deficit is due to whānau trying to pay for essentials, and commonly going into debt to do so. "This, among other markers, points to the fact that government support is not currently adequate to cover living expenses. We have concerns that some of the proposed changes would exacerbate income inadequacy in certain scenarios, particularly for whānau who need that money week to week." She said an example used in the discussion document, outlining a situation where a woman on the sole parent benefit went into additional work for a short period of time, highlighted a potentially unacceptable outcome. In that case, the woman's Working for Families credits would be reduced by $130 a week for the quarter after her temporary work, even though she was no longer in work, because the calculation was based on the higher income from the previous quarter. "We can see that the 'lagged income' mechanism makes sense from the perspective of achieving accuracy, however the potential for a decreased payment below what a whānau is entitled to poses real risk for wellbeing and social participation. "There is also a real concern over the dynamic whereby a quarterly period of higher income followed by a quarterly period of low income would see increased hardship within the low-income period, due to those payments reflecting the past higher income. "While this could be squared up during the end of year process, our data tells us that most whānau living week to week need that money as part of their weekly payments." Howard said mentors were also concerned something similar could happen if someone lost a job and went on the benefit, because their reduced income would not show up in the Working for Families calculation for another quarter. "Whānau need every cent they are entitled to in a timely manner when events such as job loss occur." A solution could be for the quarterly assessment period to look forward, rather than backwards, she said.
Otago Daily Times
3 days ago
- Business
- Otago Daily Times
Will Working for Families changes leave people worse off?
By Susan Edmunds of RNZ An organisation representing financial mentors around the country is worried that proposed changes to the Working for Families scheme could leave some families worse off. As part of the Budget, the government said it would look at options to help avoid the issue of Working for Families debt. In the 2022 year, only 24 percent of households receiving weekly or fortnightly Working for Families payments and who were squared up by IRD at the end of the tax year had received the right amount of money. People who earned more than expected can end up with an overpayment debt that that they struggle to pay back. There is almost $300 million owed in Working for Families debt. A discussion document, on which submissions were sought, said the government's current thinking was that a quarterly assessment of Working for Families eligibility could strike the right balance between responsiveness, certainty and recipient effort. This would adjust what people were paid much more frequently. But Fleur Howard, chief executive of FinCap, said in a submission in response that she was worried that some families could be left without enough money. A shorter quarterly assessment period would be an improvement, she said, but it needed to be refined. "Aspects of the proposed design appear to suit some whānau situations better than others. We are concerned that in its current state, this design would have a disproportionally negative impact on those who are already experiencing financial instability due to more fluctuations in payment amount." She said FinCap's internal data showed most financial mentor clients had a weekly budget deficit even after they had received help. "More often than not, this deficit is due to whānau trying to pay for essentials, and commonly going into debt to do so. "This, among other markers, points to the fact that government support is not currently adequate to cover living expenses. We have concerns that some of the proposed changes would exacerbate income inadequacy in certain scenarios, particularly for whānau who need that money week to week." She said an example used in the discussion document, outlining a situation where a woman on the sole parent benefit went into additional work for a short period of time, highlighted a potentially unacceptable outcome. In that case, the woman's Working for Families credits would be reduced by $130 a week for the quarter after her temporary work, even though she was no longer in work, because the calculation was based on the higher income from the previous quarter. "We can see that the 'lagged income' mechanism makes sense from the perspective of achieving accuracy, however the potential for a decreased payment below what a whānau is entitled to poses real risk for wellbeing and social participation. "There is also a real concern over the dynamic whereby a quarterly period of higher income followed by a quarterly period of low income would see increased hardship within the low-income period, due to those payments reflecting the past higher income. "While this could be squared up during the end of year process, our data tells us that most whānau living week to week need that money as part of their weekly payments." Howard said mentors were also concerned something similar could happen if someone lost a job and went on the benefit, because their reduced income would not show up in the Working for Families calculation for another quarter. "Whānau need every cent they are entitled to in a timely manner when events such as job loss occur." A solution could be for the quarterly assessment period to look forward, rather than backwards, she said.
RNZ News
5 days ago
- RNZ News
Mother challenges MOE over 'outdated' school holidays model
One Tauranga mother is challenging the Ministry of Education over what she says is an outdated model for school holidays. Karina Tendler told RNZ the number of breaks kids have during the year seems to rely on an outdated expectation that families have one parent home all the time. Money correspondent Susan Edmunds looked into the issue and spoke to Melissa Chan-Green. Tags: To embed this content on your own webpage, cut and paste the following: See terms of use.
Otago Daily Times
5 days ago
- Business
- Otago Daily Times
Should school holidays be reduced to one week?
By Susan Edmunds of RNZ New Zealand mother-of-two Karina Tendler says when it comes to school holidays, something needs to change. She recently approached the Ministry of Education asking it to consider altering the term schedule because of the financial burden she says it imposes on families. Her son recently started school, and she has a three-year-old daughter who will go to school in a couple of years. "The two-week breaks each term, combined with the five to six weeks over summer, create a significant strain on our ability to balance work and family life. "While there are private school holiday programmes available, they are often unaffordable, costing $50 to $70 per day. "We're aware of subsidy programmes, but unfortunately, we don't meet the eligibility criteria. This leaves us - and many others - in a difficult position. "I understand that the current system may have worked better in the past when single-income households were more common. "But in today's economy, dual-income families are often a necessity, and the school calendar hasn't adapted to reflect this reality." The Ministry of Social Development's OSCAR subsidy is available for school holiday programmes up to 50 hours a week. The amount parents can get depends on the number of children they have and how much they earn. Someone with two children can get $326 per child, per week in the holidays if they earn less than $1264 a week before tax. That drops to $101.50 a week if their income is between $2485 and $2669. Above that, there was no subsidy available. Tendler, who lives in Tauranga, said she was relatively new to the country and was surprised when she discovered the situation. Even working from home was not a good solution, she said. "To work from home when you have a five-year-old son with you, it's not a productive day." She said the model was outdated. "It's very oriented in terms of one parent working, one parent is staying at home. "Maybe it was like that in the past in New Zealand, but I feel the economy now and the cost of living now is not really representing that anymore, and there are a lot of families that both of the parents are working now and you need to find a solution around it." She said it seemed that teachers did not want to lose the days off. "You could still have a balance and have holidays, but not two weeks. Reduce it to one week and keep summer as it - it will help some parents." She said even with two parents splitting leave, they did not have enough days to cover the holiday. Other options could be to give parents more paid leave, or provide cheaper, government-run holiday programmes, she said. Days in school agreed in 2016 Sean Teddy, hautū (leader) of operations and integration at the Ministry of Education, said the school holidays were set - in agreement with sector groups - in 2016. Schools can choose a start date between Auckland Anniversary Day and the day after Waitangi Day, and can end no later than 20 December in any year. Secondary and composite schools need to be open for 380 half-days a year. Primary, intermediate and special schools need to open between 380 and 390 half-days, depending on the timing of Easter. "In most years, the first school holidays for primary schools are timed to include the Easter break. To create terms of a reasonably uniform length in years when Easter falls particularly early, all or some of the Easter break will fall during the first term. In these years, fewer half-days can be completed before the latest end date." The ministry told Tendler it was important to strike a balance between ensuring students were in school long enough to receive the education they needed, and having holidays long enough to give them a chance to rest and recuperate. Financial mentor David Verry at North Harbour Budgeting Services said Tendler was not alone in her concerns. He said it was something families struggled with every year. "One of the big issues is they come up in one big lump sum that you have to pay. "If it's $50 a day, that's $250 a week and that's after-tax dollars people have to come up with. Over a couple of weeks, if you have two children, that's $1000. That's a huge chunk of cash to have to front with." The summer holidays could be even tougher on family budgets, he said, because people would also have to cover the cost of Christmas and back-to-school. It was even harder on single parents, he said. Verry said he would advise people to set money aside for holiday programmes through the year, if they could, so they had the funds available when they needed them. "So you can dip into that without having to go, 'Oh gosh, we're going to have to cut our food budget because we just haven't got enough.'" While people who could work from home might have flexibility to reduce the hours their children went to holiday programmes, or not use them at all, manual workers did not have that luxury. "It's a bit harder when you have a manual job or you're working in a supermarket because you've got to be there."
