NZX joins KiwiSaver race

NZX investment subsidiary Smartshares is launching a Kiwisaver scheme.

Called SmartKiwi, the company believes that KiwiSaver will deliver strong benefits to New Zealand’s capital markets, and the economy at large.

The SmartKiwi offering will have three investment options to choose from, a high growth option consisting of equities only, split between NZX and ASX stocks; a balanced option which will be split between equities and bonds; and a conservative option which invests primarily into fixed interest securities.

Will KiwiSaver force employers to consider

“Employers who struggle to pay KiwiSaver contributions may face a double whammy paying out extra on redundancy payments if they try to downsize,” say Ernst & Young KiwiSaver spokespeople Jo Doolan and Aaron Quintal.Press release – Ernst & Young

“For employees who are members of KiwiSaver, any redundancy payments will be subject to KiwiSaver contributions both by the employee and, from 1 April 2008, the employer”

“For employers who are already thinking they may have to lay people off, but are still hoping to trade through their difficulties, this aspect of KiwiSaver may encourage them to rush through any redundancies prior to 1 April 2008 to avoid this additional cost”

“The outcome is equally unfair on employees. The purpose of a redundancy payment is to tie the worker over until they find a new job. Having 4% disappear out of their redundancy payment by way of a KiwiSaver employee contribution could be an unwelcome surprise at an already stressful time”

“This appears to be an issue that hasn’t been fully considered in the rush to get the revised KiwiSaver package in place. We would hope the Government and their officials could turn their attention to this problem sooner rather than later.

“As with anything new the complexities and wrinkles emerge over time but this is certainly not a case where employers should be sitting back and doing nothing.

Staples Rodway launches Kiwisaver scheme

Press Release: Leading accounting firm Staples Rodway has launched a KiwiSaver scheme that will be available to both their clients and the wider public.The Staples Rodway scheme includes Conservative, Balanced and Growth investment funds that are each independently managed. Members can choose any combination of these funds and will be provided with an investment attitudes questionnaire to help them with their choice.

Alternatively a member can simply choose an age group option which will see their KiwiSaver contributions invested in a combination of funds considered appropriate for their age group.

James Scarr, director of Staples Rodway Superannuation, said it is important for every New Zealander participating in KiwiSaver to ensure their contributions are being invested in a mix of growth and income assets appropriate for their age and risk profile.

“Due to their rigid investment policies the default KiwiSaver schemes may not be the best choice for every New Zealander. Staples Rodway is providing a range of funds that will offer Kiwis one or more funds to match to their risk profiles,” said Scarr.

A key feature of the Staples Rodway KiwiSaver scheme is that each fund will have an independent investment manager, based on managerial quality and historic performance.

“We will be monitoring the performance of our independent fund managers and others in the market. Based on this evaluation we are prepared to change to a better performing manager if considered necessary.

“This provides us with a key point of difference to the many other schemes being provided by financial institutions that will only offer funds run by themselves. If those funds don’t perform they’re unlikely to sack themselves and put in a competitor’s product.

“Investors in the Staples Rodway KiwiSaver scheme can take heart in the knowledge that their fund is being constantly monitored by an independent provider, with the objective of achieving consistently good performance over the long term,” added Scarr.

NZX opts for immediate maximum KiwiSaver employer contribution

Press Release: NZX has opted to make the maximum 4% employer contribution to its employees’ KiwiSaver funds from the 1 July 2007 KiwiSaver launch date.The 2007 Budget contained an enhancement to KiwiSaver that requires employers to contribute to their employees’ KiwiSaver account on a graduating scale, beginning at 1% on 1 April 2008 and climbing to 4% over four years. NZX will contribute the full 4% on commencement of KiwiSaver in two months’ time.

NZX is doing so to reflect the company’s commitment to personal savings and investments, and its support of New Zealand capital markets and New Zealand companies.

“NZX has long been a supporter of a national savings framework, so when KiwiSaver was developed we looked at ways we could make it an even more compelling proposition for our employees, both current and future,” said NZX CEO Mark Weldon.

“We’ve stated publicly that there’s no doubt that we’re in a global competition for the best talent, and that we see KiwiSaver as a tool to attract and retain high value talent on and offshore. Treating a subsidised, tax efficient personal savings scheme like KiwiSaver as part of an employee’s package is a powerful way to demonstrate how much we value our employees.

“We’ve done the math and we believe that the net cost in dollar terms to our company of immediately offering the maximum KiwiSaver employer contribution will be far outweighed by the value it brings to our talent recruitment and retention,” said Weldon.

In addition, NZX expects to see KiwiSaver confer benefits on New Zealand listed companies in the form of increased investment levels to help fund growth.

“It’s a proven fact that in Australia, where they have a compulsory retirement savings scheme, people are generally more aware of their investments and take a keen interest in the companies they’re invested in,” said Weldon.

“KiwiSaver can only be good for New Zealand companies because all of a sudden you’ll get people whose KiwiSaver funds are invested in those companies really caring about how they perform. What better motivation is there to perform well?”