Seasons Greetings and Holiday Hours

Although all the popular media that we receive celebrates the end of the year with winter pictures, snow, reindeer and snowmen - I think we are really lucky that our end of the year brings us summertime.  Hopefully the late spring chills and rainstorms vanish for a couple of weeks and we can all enjoy the end of the year celebrations and some great time off and BBQ's, sun, and leftover ham and turkey.

We have had a great year at Moneyworks (despite the stress over the US elections), and would like to thank you for working with us.  We look forward to working with you again in 2017.

Have a fantastic and safe festive season and holiday.

Here are our holiday dates for your reference.  Please let us know asap if there is something that you would like us to help you with before the Christmas break.

Working Bee - we will all be out of the office (more or less) while we have a working bee archiving and scanning clients files on Monday 19th December and Tuesday 20th December.

Last day at work for Moneyworks:       Wednesday 21st December.  We will be turning our computers off at 5pm.

Return to work: Carey and Peter Monday 9th January 2016, Paul, Mereana and Karol Monday 16th January 2017.

KiwiSaver Home Start Grants and KiwiSaver contribution requirements.

A valuable feature of KiwiSaver for younger people is how it can assist people to get into their first homes.  

Firstly, KiwiSaver members who are eligible can withdraw all the funds in their account except for the $1,000 kickstart payment to pay for their new home.  There are very few restrictions on who can withdraw these funds, as long as it is their first home and they are going to be living in the house. (There are a handful of 'second chance' opportunities as well.)

Secondly - for lower income earners, there may be the ability to receive a grant from Housing New Zealand towards the purchase of their first home.  This is in addition to withdrawing their own contributions.

There are a number of rules around receiving a grant from the Government including a test which is based on the total income of the purchaser(s), and a further test based on the value of the house that is being purchased.

People have to have been in KiwiSaver for 3 years, and can apply for a grant based on how long they have been a member - with maximums. 
In addition, the KiwiSaver member has to have been contributing to KiwiSaver.  In helping some of our clients to take advantage of these benefits, we uncovered some interesting information on the rules around contributions, which we have shared below with you.
 
1. The minimum of 3 years of contributions to qualify for the grant do NOT have to be consecutive years.  They only need to be 3 years since you have joined KiwiSaver.
2. If someone is a student or unemployed, you can still make voluntary contributions based on 3% of the average adult wage, and this will also quality you for the home start grant.

Point two is of particular interest for our financial planning clients who may have a goal of helping your children into a first home in the short to medium term. If your children are over 18 and not working, the parents can start the average wage contributions to start the 3 year qualification period rolling.

Regular and minimum contributions from the Housing NZ website.  Click on the link to get more information.

To be eligible for the HomeStart grant, KiwiSaver members need to contribute the minimum percentage of their total income (currently 3%) for at least three years to their KiwiSaver scheme, complying fund or exempt employers fund. Members are required to contribute regularly in each of the years that they are making payments, however contributions do not need to be consecutive in order to qualify for the HomeStart grant. For those earning no income, contributions for those periods will need to be made of at least the minimum percentage (currently 3%) of the minimum adult wage, based on a 40 hour week. If no voluntary contributions are made during periods of non income, then that period will not count towards eligibility for the HomeStart grant.

It is important to note that in order to qualify for the HomeStart grant, contributions must be made to the KiwiSaver member’s scheme from all sources of income, not just their main source of income.

Fisher Funds - KiwiSaver Fees - Cheaper is not always better
By Carmel Fisher, in the New Zealand Herald, Friday 24th November 2016

Mirror, mirror on the wall, which is the fairest KiwiSaver scheme of all?

If you believe the media and some market observers, it's got to be the one with the lowest fees. But, as the Queen learned in Snow White, while cheap KiwiSaver schemes may be beautiful, there may be others that are a thousand times more beautiful, despite their higher fees.

Conventional wisdom says that when comparing similar funds, if all other variables are equal, cheaper should mean better. It is generally thought the lower the fees, the more money that will be directed to your savings account, leading to a higher balance over time.

But ratings agency SuperRatings has conducted some interesting research in Australia, Hong Kong and now in New Zealand - finding low fees are far from best.

In April last year, SuperRatings issued a media release that put the cat amongst the Australian superannuation pigeons. It said that, after 12 years of superannuation industry research, results continue to show fees are not the most important factor in comparisons between funds.

Chief executive Adam Gee was quoted saying: "Any assessment based on only one criterion is fraught with danger. Fees are, at best, only loosely correlated with value.

"Any assessment of a superannuation fund should be made using a broad range of criteria with net benefit - investment returns less all implicit fees and taxes - being the only meaningful basis for comparison of fees and investment performance."

This week SuperRatings released their 2017 KiwiSaver ratings report, awarding seven schemes its highest Platinum rating (one being the Fisher Funds Two KiwiSaver Scheme).

In awarding ratings, it conducts a 'value for money' assessment by considering a range of factors beyond fees and performance, incorporating things such as member servicing, member education, advice, administration and governance.

In its media release, it noted similar findings for the KiwiSaver industry as those identified in last year's Australian superannuation research.

It said that, while fees are an important factor in assessing the competitiveness of a scheme, "there remains an unhealthy focus on fees within the KiwiSaver market, rather than the overall outcome delivered to members."

Having modelled actual returns achieved and actual fees charged by KiwiSaver funds over a five-year period, SuperRatings found "there is often an inverse relationship between fees and investment outcomes achieved by members."

The word 'inverse' is not a typo. The modelling showed that "those funds with the lowest fees will often provide lower investment returns than their higher fee counterparts".

What was even more interesting was the extent of out-performance. Gee confirmed:"... whilst fee savings will deliver some benefits to members, the associated reduction in potential investment earnings is often four to five times the level of fees saved."

In one table SuperRatings compared the net after fee and tax returns from six unnamed KiwiSaver schemes - the three with the lowest fees and the three with the highest after tax and fee outcomes. While members in the cheapest schemes "saved" $2,331 in fees over the five years to 31 March 2016 compared to the best performing scheme, they missed out on $10,334 in returns over that period, meaning they were $8,002 worse off on an overall basis.

Extrapolating these lost returns over longer periods of time could mean the difference between an okay retirement and an absolutely wonderful one.

In some products and services, cheaper is definitely better. But, for the important things in life, I'm prepared to pay more in order to get the best on offer.

I'm thinking my retirement lifestyle fits in that category.

Christmas Song [video]

Having spent ages looking for a compilation of funny Christmas movie/video clips, and screwing my nose up at the ad's I had to sit through first, I decided I would treat you all to the acapella rendition of Leonard Cohens Hallelujah by Pentantonix.  (Apologies that you still have to sit through an ad - but thats how they make their money.)





I hope you enjoy it.