Latest / Best of Business / Sam Dickie: Fisher Funds expert on the KiwiSaver changes included in Budget 2025

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Sam Dickie: Fisher Funds expert on the KiwiSaver changes included in Budget 2025 · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News talks'd be follow
• 0:12
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• 0:16
  Speaker 2: So we've got some burg changes coming to your key
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  Speaker 2: We Save A government is increasing the minimum contribution rate
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  Speaker 2: for employees and employers, or the default rather, from three
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  Speaker 2: percent to four percent. But at the same time it's
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  Speaker 2: taken out. It's basically having its own contribution rate and
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  Speaker 2: if you're earning too much money, you can get nothing
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  Speaker 2: at all. Sam Dickey from Fisher Funds is with us.
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  Speaker 3: A Sam good evening of that.
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  Speaker 2: So what I'm well, thank you, So what do you
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  Speaker 2: make Let's start with the default rate going from three
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  Speaker 2: to four percent.
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  Speaker 1: What do you think?
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  Speaker 3: I think it's exciting. It's exciting generally that we're paying
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  Speaker 3: this much attention to something as critical as Kiyi's retirement savings.
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  Speaker 3: And that is a step in the right direction. So
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  Speaker 3: we've gone from three percent to four percent. It's not
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  Speaker 3: compulsory like it is in Australia, but it's a step
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  Speaker 3: in the right direction. And as you know, what becomes
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  Speaker 3: compulsory is if the employee does elect to put four
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  Speaker 3: percent or contribute four percent of the key we save it.
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  Speaker 3: Then it's compulsory that the employer matches it. Yeah, and
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  Speaker 3: the other things that step in the right direction. I'm
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  Speaker 3: sure my thirteen and fifteen year old sons will be delighted.
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  Speaker 3: Is the extension of the eligibility of the government contributions
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  Speaker 3: to sixteen seventeen year olds?
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  Speaker 2: Does it mean your sons have to get jobs in
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  Speaker 2: order to qualify for that?
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  Speaker 3: That's music to my ears. I hope that's the case.
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  Speaker 2: I love what we're doing here. What do you make
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  Speaker 2: though of the government having its contribution for lower earners
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  Speaker 2: and then cutting off the one to eighty thousand plus.
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  Speaker 3: I think balancing the books is important, and that's part
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  Speaker 3: of what they're trying to do there, But it's not
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  Speaker 3: clear to me how harving of the government's contribution sends
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  Speaker 3: the right signal to save us. And when you compound
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  Speaker 3: two hundred and fifty bucks for forty seven years, so say,
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  Speaker 3: from the age of eighteen to the age of sixty five,
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  Speaker 3: at market returns of say seven percent, it comes to
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  Speaker 3: sort of sixty five to seventy thousand, which is a
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  Speaker 3: big number. Having said that, they've come all the way
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  Speaker 3: from matching US dollar for dollar to matching US twenty
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  Speaker 3: five cents on the dollar. So it's pretty clear the
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  Speaker 3: direction of travel and.
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  Speaker 2: Do you believe the direction of traveler is the next move?
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  Speaker 2: Is nobody gets a government contribution at all.
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  Speaker 3: I'm not sure about that. Like if you look around
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  Speaker 3: the world, in Australia there is still government contributions for
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  Speaker 3: low income owners. And I do think it does send
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  Speaker 3: a signal for savers. And I do think that you know,
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  Speaker 3: the power of compounding is real. And when you consider
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  Speaker 3: the average key we save a balance today in New
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  Speaker 3: Zealand is less than forty thousand dollars. That two hundred
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  Speaker 3: and fifty dollars matters for an eighteen year old, that's
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  Speaker 3: seventy thousand dollars compounded up over forty seven years. So
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  Speaker 3: I do think the signaling matters.
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  Speaker 2: And over in Australia, at what point what is the
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  Speaker 2: income threshold before the government doesn't give you anything? At
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  Speaker 2: what point are they still giving you money? Oh, I'm
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  Speaker 2: going to have to I mean, I imagine one because
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  Speaker 2: it must be lower than it is here, Sam, one
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  Speaker 2: hundred and eighty thousand dollars is a reasonable whack.
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  Speaker 3: Yes, that's right. So what's that three to four percent
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  Speaker 3: of New Zealanders and over that amount, and they're no
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  Speaker 3: longer eligible for the two hundred and fifty dollars of
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  Speaker 3: government contributions, which.
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  Speaker 2: Means They'm not like ninety six percent of us are eligible.
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  Speaker 3: That's right, we're eligible for the two hundred and fifty dollars,
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  Speaker 3: and now our sixteen and seventeen year olds are eligible
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  Speaker 3: as well. Now, so they take it from the one
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  Speaker 3: hundred and eighty thousand dollars earners and they give it
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  Speaker 3: to our young leaders of tomorrow.
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  Speaker 1: I guess yeah, which is fair enough.
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  Speaker 2: But I mean, if what you're trying to do is
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  Speaker 2: sort of you know, I don't know. I mean, I
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  Speaker 2: just think I probably would have come tested at a
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  Speaker 2: lower level. But anyway, I mean, what you were looking
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  Speaker 2: for here, which is more important, is you were looking
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  Speaker 2: to see a bit of a long term roadmap, right
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  Speaker 2: are you having to I mean, don't I don't think
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  Speaker 2: you got that. So are you having to kind of
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  Speaker 2: fill it in by filling in the blanks?
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  Speaker 3: I think so. I mean we would love I'm sure
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  Speaker 3: we and employers and savers in other words, Kiwis would
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  Speaker 3: love to have seen a ten year roadmap and so
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  Speaker 3: they can more easily make a plan, and what I
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  Speaker 3: mean by that is a plan on how to close
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  Speaker 3: the yawning gap between the average kis have a balance
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  Speaker 3: of approximately forty thousand dollars and the six hundred and
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  Speaker 3: fifty thousand. Now that's the midpoint of the range of
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  Speaker 3: a massive university study that on average a couple needs
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  Speaker 3: a retirement and that, by the way, that's assuming they
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  Speaker 3: are already living in a mortgage free house. So that's
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  Speaker 3: a yawning gap between the forty thousand dollars ballance today
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  Speaker 3: and six hundred and fifty thousand dollars, and I think
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  Speaker 3: that needs long term planning, in a long term roadmap.
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  Speaker 2: Like you say, yeah, hey, Sam, thank you. Always appreciate
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  Speaker 2: talking to you, mate, Appreciate your expertise at Sam Dicky
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  Speaker 2: Official Funds.
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