Many people are unsure about it, or maybe have the wrong idea about KiwiSaver, Rowan says.
At JUNO, our aim is to help Kiwis make better decisions about KiwiSaver. We get it: sometimes KiwiSaver is a bit confusing, so we try to provide information which is easy to understand.
This is a common misunderstanding about KiwiSaver – people don’t realise you can pick who invests your money for you.
When you first join KiwiSaver, you’ll be automatically put into one of nine default providers by the Inland Revenue Department (IRD) (or your employer's preferred provider) and your money will be invested into that provider’s default fund, which is usually a less risky ‘conservative’ fund.
But at JUNO, we encourage you to do a bit of research and find the KiwiSaver provider right for you, so your money is invested to suit your life stage and how comfortable you are with risk.
If you want to change providers, just contact the one you want to join.
2. My money is with KiwiSaver
When Rowan asks Kiwis who their KiwiSaver provider is, they say their money’s with ‘KiwiSaver’.
It’s easy to see how confusion occurs. If you’re contributing money to a KiwiSaver account, you’re enrolled in KiwiSaver. But your money is managed by whoever you’ve chosen to be your provider, or wherever you’ve been defaulted by the IRD.
It’s important to understand while your money is invested through a government scheme – KiwiSaver – it is not invested by the government and is not guaranteed by the government, either.
Here at JUNO, Pie Funds is the manager of the JUNO KiwiSaver Scheme. But your money isn’t physically at Pie Funds, it’s held by a big bank – called a ‘custodian’ – which controls and maintains an independent record of what goes into and out of your account.
3. I don’t get charged fees
If you’re contributing money into a KiwiSaver account, it’s very likely you’ll be charged fees.
There are a few exceptions – for example, at JUNO, we don’t charge fees for balances under NZ$5,000, or for members under 18.
Sometimes it’s hard to find out how much you’re paying in fees on your KiwiSaver balance, and fees often have different names (such as membership, performance or management fees). Some of the fees are also percentages, which can make it hard to work out the amount you’re paying in dollars (which, over a period of years, can be a lot).
At JUNO, we encourage all KiwiSaver members to find out what they’re paying in fees, and make sure they’re happy with what they’re getting in return. Find out more about KiwiSaver fees here.
4. The government will steal my money
Your KiwiSaver account is your account. No one else can touch it, it’s in your name and it’s your money. The money can’t be stolen by the government.
All KiwiSaver providers are licensed by the Financial Markets Authority. Being licensed means they have met minimum standards and are proactively supervised and monitored by the FMA as part of the terms of their licence.
All KiwiSaver providers also have a licensed supervisor. The licensed supervisor is there to ensure the KiwiSaver provider meets its legal obligations.
Since KiwiSaver was launched, some schemes have closed, for a variety of reasons. All their members were transferred to other providers, and no one lost any money because of the transfer.
5. The government is just investing money into their own businesses, so they get profits
The government can’t use the money in your KiwiSaver account.
The money goes from your pay to the Inland Revenue Department, which makes sure it goes to the scheme you’ve chosen, or the scheme you’ve been assigned to through the default system.
The money is then invested on your behalf by the fund manager. As a KiwiSaver member, it’s you who gets your share of the profits made on the investments, not the government.
Individual members are taxed at their own Prescribed Investor Rate, based on the returns in their own accounts. (Find out more about that here.)
Join JUNO KiwiSaver Scheme
Published 19 March 2019
Story by Claire Connell, JUNO
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser. All content is correct at time of publication date.