Labour wants to implement CPF model for NZ (current pension scheme not sufficient)

[Leongsam]

Tamsyn Parker: How much is enough?

By Tamsyn Parker
2:01 PM Wednesday Jun 25, 2014

How much is enough? Photo/ Kellie Blizard.


Labour's proposal to make KiwiSaver compulsory has sparked an interesting debate in Your Money about how much people need to save to live off in retirement.

Retirement is a long way off for me but I'd still like to know I am on track.

Let's face it by the time you reach your 60s it's too late to save a big nest egg unless you are earning a large amount of money or sell a valuable asset like a business or a property.

The idea of saving a little bit each pay over my working life seems far more achievable.

But figuring out exactly how much I might need to live off in retirement seems really hard.

The Financial Services Council has suggested a figure of $350,000 but the Commission for Financial Literacy and Retirement Income says it depends on the individual.

Retirement industry policy expert Michael Littlewood believes more research is needed to help people work it out.

Surely more information can only be a good thing in this situation.

What do you think?

Too much

One reader of Mary Holm's column suggests a couple will need $100,000 a year to live off and a nest egg of $1.2 million to pay for that.
But Holm is quick to debunk that theory and points out that figure is way above the average income that workers currently earn.

She also addresses a number of concerns about employers taking their KiwiSaver contribution from the employee's pay packet.

Known as total remuneration it's an issue that has upset a number of people although employers say it is fairer to those who don't want to join KiwiSaver.

Read Holm's column if you are in this situation and have concerns about what your employer can and can't do.

Mental health and money

Diana Clement's piece about mental health issues affecting people's finances really struck a chord with me this week.

Being in a tough financial situation is enough to make anyone feel stressed and have sleepless nights but it's even harder if you have mental health issues or, as one person in the comment's section has pointed out, a physical disability.
Just recognising you have a money problem linked to mental health may be hard enough let alone asking for help for it.
Clement's article has some great suggestions on ways to help.
Second time round

This week's KiwiSaver Q&A addresses the issue of using KiwiSaver to build a house if you already own the land.

It also has some advice for people who have already owned property in the past but may be back in the same position as a first time buyer due to unforeseen circumstances.

By Tamsyn Parker
- NZ Herald

Copyright ©2014, APN New Zealand Limited

 

[da dick]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

this is what happens when sinkie quitters give angmos all the pappies' bad ideas

 

[frenchbriefs]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

i dont mind putting my money into kiwi saver than this Con You CPF.

 

[winnipegjets]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

Their model will not be like the CPF ...pay interest that is lower than the rate of inflation. The kiwis will lynch the government if it even dares to try.

 

[Spock]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

I checked up on this and the scheme has one crucial difference. The money is not managed by the government. You decide which financial institution you want to invest your money with. It is more transparent than the CPF and there is no vested interest for the government to constantly change the rules.

 

[frenchbriefs]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

yes i cant believe how kiwis can say no to that

 

[Leongsam]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

I checked up on this and the scheme has one crucial difference. The money is not managed by the government. You decide which financial institution you want to invest your money with. It is more transparent than the CPF and there is no vested interest for the government to constantly change the rules.

It currently is not compulsory. The fact that it is not compulsory also means that it is not guaranteed by the government. The returns could be higher but you could also lose it all.

If labor wins the next election and Kiwisaver is made compulsory, the government will have no choice but to guarantee the returns which in turn will mean a very conservative strategy. Interest rates will therefore fall in line with government bond and term deposit rates.

KiwiSaver in a nutshell

https://www.kiwisaver.govt.nz/new/about/summary/

KiwiSaver is a voluntary, work-based savings initiative to help you with your long-term saving for retirement. It's designed to be hassle-free so it's easy to maintain a regular savings pattern.

There are a range of membership benefits to encourage you to get saving. They include a $1,000 kick-start, regular contributions from your employer and an annual member tax credit paid by the Government. Some people may also be eligible for help with the deposit on their first home.

KiwiSaver schemes are managed by private sector companies called KiwiSaver providers. You can choose which KiwiSaver provider to invest your money with.

KiwiSaver is not guaranteed by the Government. This means you make your investment choices in a KiwiSaver scheme at your own risk.

 

[frenchbriefs]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

It currently is not compulsory. The fact that it is not compulsory also means that it is not guaranteed by the government. The returns could be higher but you could also lose it all.

If labor wins the next election and Kiwisaver is made compulsory, the government will have no choice but to guarantee the returns which in turn will mean a very conservative strategy. Interest rates will therefore fall in line with government bond and term deposit rates.

i thought it has various mutual funds of stocks and bonds?how do u guarantee the returns of stocks and bonds?anyway it doesnt matter,as long as they invest for the long term 10 to 20+ years....they should be fine.....all markets always grow over time partly because of inflation and partly because of economic growth.

 

[Spock]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

It currently is not compulsory. The fact that it is not compulsory also means that it is not guaranteed by the government. The returns could be higher but you could also lose it all.

If labor wins the next election and Kiwisaver is made compulsory, the government will have no choice but to guarantee the returns which in turn will mean a very conservative strategy. Interest rates will therefore fall in line with government bond and term deposit rates.

That still does not mean that the government is going to manage your money. At the very least, you will have some say over how your money is invested. The point is that the government does not have a direct interest in changing the rules as the money is not in their hands.

 

[krafty]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

at least there are proper wages in NZ, sinkies are paid miserably and work like a horse, or you may be a white collar and paid higher but work like a cow ploughing a field.:o

 

[winnipegjets]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

It currently is not compulsory. The fact that it is not compulsory also means that it is not guaranteed by the government. The returns could be higher but you could also lose it all.

There is NO risk if you invest for the long haul in the S&P. If global depression happens, the government won't be able to pay up too.
Look at the CPF vs S&P returns difference when invested/saved over 30 years ....$150k vs $1 million. Only a fool would give up such a huge return for 'safety'!

If labor wins the next election and Kiwisaver is made compulsory, the government will have no choice but to guarantee the returns which in turn will mean a very conservative strategy. Interest rates will therefore fall in line with government bond and term deposit rates.

Hopefully, the kiwis will be smart enough to reject an outright copy of the CPF model.

 

[Leongsam]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

at least there are proper wages in NZ, sinkies are paid miserably and work like a horse,

If you ask a low wage earner in NZ, they will say exactly the same thing.

 

[winnipegjets]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

If you ask a low wage earner in NZ, they will say exactly the same thing.

That's why we need a minimum wage that is liveable.

 

[steffychun]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

Does the PM's wife own an investment fund?

 

[Leongsam]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

That's why we need a minimum wage that is liveable.

Define "liveable".

 

[bakkuttay]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

bluddy nincompoop!!!!!!!!!!!!!
problem here is not CPF, it is the forever shifting of the goalpost.

 

[winnipegjets]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

Does the PM's wife own an investment fund?

One that is worth hundreds of billions!

 

[winnipegjets]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

Define "liveable".

Alamak, sounds like Vivian asking the question of what kind of meal you want.

Heard of the living wage?

 

[Leongsam]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

Alamak, sounds like Vivian asking the question of what kind of meal you want.

Heard of the living wage?

Yes I hear this stupid term umpteen times a week in NZ. I don't know what it means where you are but in NZ, the proponents want NZD18.80 per hour.

http://www.livingwagenz.org.nz/

This works out to NZD3308.80 per month for an 8 hour a day x 22 days job.

My good friend's son is an electronics engineering graduate and he's been working in NZ for 5 years and currently earns NZD39,000 per year.

So if the minimum wage was set at the claimed "living" wage, it would mean that a 17 year old with no experience no qualifications who flips hamburgers at Mcdonald's will earn about the same amount as a qualified engineer with a tertiary education.

To add insult to injury, there are many teachers and nurses who are on $30,000 a year so they'd end up earning less than a hamburger flipper.

It goes without saying that the teachers' nurses' and engineering unions would not take this lying down and would demand pay increases for all their members to commensurate with their qualifications, experience and the importance of their jobs.

So the ball would start rolling and every profession and trade would have to move up a notch.

This would raise costs for everyone and we all know that the money has to come from somewhere so businesses would raise their prices, govt would raise their fees and taxes, doctors would raise their consultations, McDonald's would do away with their specials and the consumer would end up footing the bill.

NZD18.80 would therefore no longer be sufficient for a living wage anymore and the living wage campaigners would set a new target of say NZD22.80.

And so it would go on. The treadmill would go faster and faster and everyone would have to run harder in order to just stay in the same spot.

 

[krafty]

Re: Labour wants to implement CPF model for NZ (current pension scheme not sufficien

my friend working in intel at melbourne just graduated couple of years ago with a BEng EEE, he is taking home 120K per year before taxes.:o