KiwiSaver

KiwiSaver is a great way for New Zealanders to save for their retirement.

Switching your KiwiSaver Provider is easy

It is very easy to switch your KiwiSaver provider to the Milford KiwiSaver Plan if you are already a KiwiSaver member.  You will just need to complete a Milford KiwiSaver Plan application form, specifying your current provider, and once we receive your forms we will complete your transfer on your behalf.  Milford does not charge any fee to transfer your KiwiSaver fund.  For more information pelase click here to be taken to the 'How to Join' page.

Incentives for savers

KiwiSaver is very popular with investors because of the recognition by New Zealanders of the need to save for their retirement. It currently provides incentives for savers including: a $1,000 kick start, a minimum 2% compulsory employer contribution for employed members and an annual tax credit of up to $1,043 paid by the Government. For example if an employee earning $55,000 a year contributes 2% of gross salary ($1,100) annually to their KiwiSaver fund, their employer will then have to contribute a minimum of $1,100 over the year and the Government will pay in an annual tax credit of up to $1,043.

Importance of Return and Compounding

Due to the power of compounding returns, the potential size of your KiwiSaver fund can become very significant. Based on annual returns of between 2.5% and 10% (after fees and tax) the estimated fund size when an individual reaches 65 is shown in the chart below.

It assumes a starting salary of $30,000 salary growth of 2.5% per annum, employee and employer contributions of 2% pre-tax pay to KiwiSaver, annual Government contributions commensurate with salary levels, a Government kick-start of $1,000 received in the first year, no contributions holidays are taken and future values are not adjusted for the impact of inflation.

Please note that this is a generic illustration only to show the positive effect of compounding returns.  No returns are guaranteed or assured, and can be negative, particularly given the length of the investment period shown in the illustration.

 

 


Potential Future Value of KiwiSaver Funds

 

 

 

Return after tax and fees Number of years contributing to KiwiSaver
5 years 15 years 30 years 45 years
2.50% $11,082 $39,744 $112,483 $235,649
5.00% $11,810 $48,022 $165,852 $432,400
7.50% $12,585 $58,420 $252,697 $853,849
10.00% $13,410 $71,500 $395,742 $1,782,419

 

 

 

Assumptions:
Starting salary of $30,000, salary growth of 2.5% per annum, contribution rate of 2.0%, employer contribution of 2.0%.

To look at answers to questions relating to KiwiSaver in general you can also visit:

Please click here to read a copy of the Milford KiwiSaver Plan Investment Statement.
Please click here to read a copy of the Milford KiwiSaver Plan Prospectus.