KiwiSaver

KiwiSaver schemes will be required to disclose their approach to responsible investment from 1 April 2008 under legislative proposals released today by Finance Minister Michael Cullen and Revenue Minister Peter Dunne.
Press Release

KiwiSaver schemes will be required to disclose their approach to responsible investment from 1 April 2008 under legislative proposals released today by Finance Minister Michael Cullen and Revenue Minister Peter Dunne.

The proposals have been designed to enable New Zealanders enrolled in KiwiSaver to have full confidence in the environmental and social credentials of the investments made on their behalf by KiwiSaver and KiwiSaver complying schemes.

“Growing numbers of shareholders worldwide want to ensure that their investments do not support activities or practices they do not approve of,” the Ministers said. “Many are also taking that a step further and want their investments to support activities and practices they do approve of.

“KiwiSaver providers will have to disclose in their investment statements whether their investment policies and procedures take into account responsible investment criteria – including environmental, social and governance considerations.

“If they do, they must tell members where they can obtain further information on the extent to which they take responsible investment into account. This will also allow funds with responsible investment policies to market their credentials.

“The Securities Commission will provide guidance notes for funds over the next few months,” the Ministers said.

The changes were outlined in Budget 2007 and it is proposed that they will be included in the taxation bill currently before Parliament by means of a supplementary order paper that amends the KiwiSaver Act.

The latest enrolment numbers for KiwiSaver confirm that the work-based saving scheme is off to a strong start, Finance Minister Michael Cullen and Revenue Minister Peter Dunne say.Total enrolments received by Inland Revenue had reached 129,591, with 5,900 opt-outs also received.

“It is encouraging to see that just two months since the launch of the scheme, almost 130,000 people are already saving for a better standard of living in retirement through KiwiSaver,” the ministers said.

The ministers provided details of how that 129,591 enrolment figure can be broken down:

• 61,061 people who have actively chosen a provider and gone directly to a scheme to enrol

• 51,139 people who have actively chosen to join KiwiSaver and enrolled via their employer
• 17,391 new employees who have been automatically enrolled by their employer.

The ministers noted that the figures include numbers of employees who are automatically enrolled in KiwiSaver who have eight weeks to opt out, so that could potentially affect the total.

“These figures are heartening, but they are just the start,” the ministers said.

“We’ll see them continue to rise as people realise the value of saving for retirement – especially when, subject to legislation now before Parliament being passed, compulsory employer contributions to KiwiSaver start next year.”

Kiwistart Investment flexibility, transparent costs and leading advice are the cornerstones behind kiwiSTARTTM, ABN AMRO Craigs new superannuation initiative just launched.
Press Release

Kiwistart Investment flexibility, transparent costs and leading advice are the cornerstones behind kiwiSTARTTM, ABN AMRO Craigs new superannuation initiative just launched.

kiwiSTARTTM offers individuals a sophisticated KiwiSaver product.

Our scheme provides not only a range of defined portfolios, but also personalised solutions. Investors, with the support of an Investment Advisor, can select the securities they wish to invest in, thereby tailoring their investments to their personal circumstances, explains Stephen Jonas, Head of Client Services at ABN AMRO Craigs.

With kiwiSTART, clients who already have investment portfolios are given the opportunity to manage their investment risks over their entire portfolio rather than treating superannuation as a discreet and separate investment.

The scheme also incorporates the key tenets of ABN AMRO Craigs investment philosophy. We invite clients to monitor the composition of their investment, and help them understand investment markets, risks and rewards.

A key component of our philosophy is to minimise costs and provide a full disclosure of fees, says Jonas.

ABN AMRO Craigs core expertise is providing quality investment advice for its clients. New Zealanders need to better understand superannuation investment, explains Jonas.

They should understand exactly what they are investing in and the risks associated with that investment. They should also always seek sound professional advice.

Jonas says that making the wrong choice with a KiwiSaver scheme provider can be costly with those who change schemes potentially incurring additional entry and exit fees. He also warns that headline rates or fees may appear low but the full costs and expenses may not be apparent and expert advice is required.

ABN AMRO Craigs has over 100 Investment Advisors throughout its 16-branch network, helping clients make more informed investment decisions.

The company has not participated within the superannuation space previously, but with years of investment management experience, KiwiSaver provides an opportunity to broaden the range of services it offers for both existing and potential clients.

As we have designed kiwiSTART to be flexible, we are able to encapsulate elements of socially responsible investing, by incorporating a range of SRI options as part of our personalised investment choices, says Jonas.

Although its product differs by enabling greater individually managed accounts, people who sign up to kiwiSTART will still qualify for all the Government incentives to which they are entitled.

The government is proposing further changes to super schemes in line with its aim of encouraging greater savings, Finance Minister Michael Cullen, Commerce Minister Lianne Dalziel, State Services Minister Annette King and Revenue Minister Peter Dunne announced today.

“The amendments we propose will give those in super schemes that comply with KiwiSaver rules more protection and allow savers better access to their funds in retirement,” the Ministers said.

“It is important that existing schemes which wish to become KiwiSaver-complying face the same rules as KiwiSaver schemes.”

The Ministers said the changes were a small but significant fine-tuning of proposed KiwiSaver legislation.

“The ideal time to make these adjustments is now, while a Bill dealing with KiwiSaver legislation is before Parliament.”

The changes include:
Requiring complying funds as well as KiwiSaver funds to lodge employer participation agreements with the Government Actuary. Employer participation agreements set out conditions under which employees are scheme members. This measure will give greater protection to employees, by ensuring there is government oversight of employers’ involvement in these funds.
Allowing benefits in complying superannuation funds to be withdrawn as a lump sum. This will give members of complying schemes the choice of taking a lump sum or buying an annuity when they are eligible to access their savings, a provision which already applies to KiwiSaver schemes. As legislation stands, members of complying superannuation funds may be forced to buy annuities at extra cost.
Avoiding “double-dipping”. Members of some existing superannuation schemes in the State sector already receive a contribution from the Crown as their employer. This will continue unchanged. However the legislation will be amended to provide extra assurance that if these people also join KiwiSaver they will not be able to receive additional employer contributions.

As well, as previously announced, the legislation will be amended to make sure that people receive the member tax credit of up to $20 a week from the time they join KiwiSaver. As the legislation is currently worded, some KiwiSaver members would not become eligible for the tax credit until several weeks after they began making contributions.

Under the proposed law change, the member tax credit will apply from the first of the month in which the contribution is made, so that, for example, all contributions that begin in July will be matched by a tax credit from 1 July.

“We are confident these changes will further strengthen KiwiSaver, and make it a more attractive proposition for New Zealanders wishing to secure a more comfortable retirement,” said the Ministers.

The changes will be added to the Taxation (Annual Rates, Business Taxation, KiwiSaver and Remedial Matters) Bill, which is currently before Parliament.