If it's free, is there a catch?

If it's free, is there a catch?
Feb 10, 2018

Like most people, we are a bit suspicious of things that sound too good to be true, especially when the word ‘free’ is thrown in. And yet we are still finding many clients who are yet to make the most of KiwiSaver and take advantage of the ‘free’ money that is on offer to them.

To refresh what’s on offer, here are the bullet points on the Free money: 

If you are employed and contribute to KiwiSaver then your employer will also contribute 3% 

If you have contributed at least $1,042.86 in the KiwiSaver year (1st July-30th June) then you will be eligible for the maximum Member Tax Credits (MTC’s) of $521, which are automatically applied to your fund (provided you have been a KiwiSaver member for the full year) 

If you are buying your first home, you could be also eligible for up to $5,000 from Housing New Zealand as well as having access to your KiwiSaver funds for your house deposit. 

The most common question is that people don’t trust it and, what if KiwiSaver is abolished?

KiwiSaver Funds are not held by the Government, they are owned by the individual, with fairly strict withdrawal rules to ensure the money is there for retirement. If a future Government pulls the pin on KiwiSaver, or some of the freebies, then what is in the pot already will always be yours. This should be an incentive to join now, rather than pontificate for longer.

Our children who have been contributing since they started work have more than half their fund value as a result of free money.

This enabled our daughter and partner to purchase their first home in Auckland using the First Home Withdrawal and the free $10,000 they were jointly eligible for under the Home Start Grant.

For those of you already in KiwiSaver don’t get into the habit of jumping from one to another, purely as a result of the latest performance figures and/or fees or simply because the bank tell you that you can view your KiwiSaver on your bank statement.

Who is giving you advice on the best place for YOUR money?

Unless you use an adviser, it’s likely you won’t be receiving any advice. You may get some advice initially from the bank but you certainly wont get any advice on an ongoing basis nor will the keep a close eye on what your fund is doing.

Use Foresight to make sure you are making the most out of the free money as KiwiSaver is really making a difference to youngsters and retirees alike. Professional unbiased advice is the way to go.

To get in touch with Mike and Amanda, please call (06) 751 4510 or email [email protected]. This article is generic information and not personalised advice. A disclosure statement is available free and upon request.