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Cliffe Consulting | KiwiSaver Experts| Auckland
Cliffe Consulting | KiwiSaver Experts| Auckland
will my kiwisaver be enough for my retirement?
KiwiSaver is a great way to save for retirement or your first home. And for many people, it’s their first financial investment.
But many New Zealanders don't know enough about their KiwiSaver to make sure it's right for their situation and goals.
Understanding your KiwiSaver options is key to helping you make the right choices so that you understand the likely investing journey and have a better outcome.
How We Work Together To Help You with KiwiSaver
We’ve been strong advocates of KiwiSaver since its launch in 2007 and have been heavily involved in efforts through the years to improve outcomes for members. Financial outcomes from KiwiSaver have and are being influenced by incorrect investment strategies, many promoted by some of the largest scheme providers, media commentators, and unaddressed over-taxation of default fund members for many years.
With our in-depth knowledge of KiwiSaver, we are able to recommend the best provider based on your situation, values, and short, medium and long-term goals.
Start planning for a secure financial future today
1. Book a call
Book a call. We’ll set up a time to meet with you and talk about your questions, concerns and goals.
2. Create a plan
In your financial planning session; we’ll go through the numbers and create a plan that helps you sleep well at night.
3. Enjoy life
With a financial plan in place; you’ll be able to get on and enjoy life knowing your future is taken care of.
When Cliffe Consulting Took On The Government (And The Banks) About KiwiSaver Tax Rates
When Cliffe Consulting Took On The Government (And The Banks) About KiwiSaver Tax Rates
Like in Australia, there are severe issues in the New Zealand financial sector. As Independent Financial Advisers, we believe it is essential that we speak up on these issues that affect our community.
In July 2018, we led a group of independent Authorised Financial Advisers to write an open letter to the Financial Markets Authority and the Reserve Bank of New Zealand. We expressed deep concerns over the treatment of over 400,000 KiwiSaver default fund members. For various reasons, they had missed out on around $1 billion over the last six years. You can read our letter here.
Some 35 media outlets reported on the story, and John completed four radio interviews. The University of Auckland's Retirement Policy and Research Centre supported the issues (you can read their full media release here). In their press release, ANZ, New Zealand's largest KiwiSaver provider at the time, said that in terms of making sure that members' KiwiSaver accounts weren't left in conservative funds, "We support that 100%" (read their full media release here).
The motivation to change the default KiwiSaver regime required political support.
Our letter
● Assisted in achieving an expanded objective in the default provider review in 2019, along with a review of KiwiSaver investment practices.
● Prompted significant changes to be made in December 2021 to the default KiwiSaver regime, with default funds required to be 'Balanced' rather than 'Conservative' Funds.
● In addition, five default providers lost default status. These were the five schemes that our open letter in 2018 identified where the worst performers in engaging with their default members to help them make an active choice and switch out of the default fund.
If you don't know who your KiwiSaver provider is, it's likely to be in a default fund. If so, it’s time to talk about it with us.
And then there was the tax issue
In 2019, Rachelle launched a petition to Parliament so that people enrolling in KiwiSaver by auto-enrolment would be taxed at their correct tax rate right from joining.
Since its establishment, KiwiSaver members who have been auto-enrolled have been taxed at the default tax rate of 28% rather than being able to elect their tax rate (known as their Prescribed Investor Rate, or PIR) when joining. Why? Because the KS2 form does not provide a field for this.
Unlike income tax, KiwiSaver tax is based on your earnings in the two previous financial years. And, as it is a 'final tax', any overpaid tax could not be repaid. This unfairly disadvantaged young and low-paid workers who could be eligible for a 10.5% or 17.5% tax rate.
In 2019, the IRD revealed that 1.5 million people had been paying the wrong tax rate on KiwiSaver and other Portfolio Investment Entity (PIE) investment schemes and 900,000 of those were estimated to have overpaid $42m in tax in the financial year ending 2019.
Click here to listen to Rachelle's presentation to the Finance and Expenditure Committee about her petition to fix overpaid KiwiSaver tax in March 2021 and hear the IRD's response.
After 14 years of collecting additional tax, only after Rachelle's petition did the IRD start sending auto-enrolled KiwiSaver members' tax rates to their providers at the time of joining. The IRD now notifies KiwiSaver and PIE issuers where members' PIR rates need to be changed, thereby ensuring that members pay the right amount of tax at the right time.
Many people were and are unaware of how tax works on KiwiSaver because there is no mention of PIR or tax in any IRD's forms and guides for auto-enrolling KiwiSaver members.