Latest / Best of Business / Lisa Dudson: finance expert on the Government's new changes to KiwiSaver

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Lisa Dudson: finance expert on the Government's new changes to KiwiSaver · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks Be follow
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  Speaker 2: So it was kind of not necessarily the centerpiece, but
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  Speaker 2: a big part of the government's budgets. On Thursday, several changes,
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  Speaker 2: notable changes to the key we save a scheme. Lisa
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  Speaker 2: Dudson is our personal finance expertencies with us. Now, Hey Lisa,
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  Speaker 2: good morning Jack. So let's run through a couple of
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  Speaker 2: these changes and explain what they're going to mean for people.
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  Speaker 2: Let's start off with the contribution rate. So they're staggering
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  Speaker 2: the increase from three percent up to four percent. It
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  Speaker 2: goes to three and a half percent next year, and
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  Speaker 2: then to four percent by April twenty twenty eight. What's
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  Speaker 2: this going to mean?
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  Speaker 3: Well, I actually think for most people it's going to
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  Speaker 3: be a really good thing because I guess it's going
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  Speaker 3: to be growing their balances for the long term, so
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  Speaker 3: that's you know, no one can really complain about that.
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  Speaker 3: It also helps home buyers build up a bigger deposit
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  Speaker 3: for their home. The challenge has been for you know,
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  Speaker 3: some commentators believe that it's going to be a little
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  Speaker 3: bit harder for those on a lower income to be
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  Speaker 3: able to afford those four percent increases when they come in.
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  Speaker 2: Yeah, I mean, can you understand how that might be
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  Speaker 2: tricky for some people, But yeah, by staggering, hopefully you know,
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  Speaker 2: they'll be able to make that transition. It's also going
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  Speaker 2: to be a little bit harder for business as well,
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  Speaker 2: of course, I mean.
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  Speaker 3: This is good well know, yeah, well yeah, and given
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  Speaker 3: you know, times of puff and we're still in a
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  Speaker 3: bit of a cost of living crisis, so you know,
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  Speaker 3: I think, you know, it's trying to balance that short
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  Speaker 3: term versus long term, right, because on one hand we
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  Speaker 3: kind of go, we're things are a bit tough at
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  Speaker 3: the moment, just but on the other hand, we're going, well,
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  Speaker 3: if we don't start contributing more to our super then
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  Speaker 3: we're having hard time financially, you know, when we're post
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  Speaker 3: that sixty five. So you know, it's just trying to
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  Speaker 3: find a balance. And interestingly, when you compare it to Australia,
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  Speaker 3: who started a sort of three to four percent in
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  Speaker 3: nineteen ninety two, it took them almost twenty years to
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  Speaker 3: start to increase it to nine percent, and then now
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  Speaker 3: it's I think it was twelve and July. Yeah, so
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  Speaker 3: that's kind of where we need to be heading. And
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  Speaker 3: I guess once these changes come in, will be at
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  Speaker 3: eight between the employee or close to eight between the
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  Speaker 3: employee and the employer. So we're you know, we're getting there.
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  Speaker 2: Twelve percent. You think about that like a quarter of
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  Speaker 2: you know, if you have a twelve percent employee salary,
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  Speaker 2: twelve percent contribution from the employer as well, you're looking
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  Speaker 2: at a quarter of your salary.
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  Speaker 3: And yeah, I know, yeah here, oh yeah, right, okay.
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  Speaker 1: I checked.
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  Speaker 2: I checked out the tax rates too for the for
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  Speaker 2: the employer contribution and for most people I think, you know,
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  Speaker 2: depending on incomes, most people would be taxed less on
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  Speaker 2: the employer contributions in Australia than they would in New
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  Speaker 2: Zealand as well, which is interesting. So the scheme's being
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  Speaker 2: extended now from to sixteen and seventeen year olds, so
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  Speaker 2: you get automatically enrolled in keep we say, for at eighteen,
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  Speaker 2: but you can voluntarily opt in a little bit earlier.
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  Speaker 2: That's going to be a good.
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  Speaker 3: Thing, right, yeah, Well, because you have a couple of
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  Speaker 3: extra years to sort of build towards your home deposit
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  Speaker 3: or you and or you know, your future, you know,
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  Speaker 3: retirement pot of money, so you know, that's great. I
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  Speaker 3: think the other side effects that might be that younger
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  Speaker 3: people are starting to get a sense of, you know,
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  Speaker 3: how the financial world works from it's like the younger age,
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  Speaker 3: So that can't be bad. So I think I think
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  Speaker 3: most of U should be pretty happy about that new policy.
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  Speaker 2: What do you think about the government contribution changes though?
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  Speaker 3: Ah, you know, again, it's you know, it's always trying
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  Speaker 3: to find that balance between you know, different people's circumstances.
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  Speaker 3: But I think, you know, they're trying to save the
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  Speaker 3: money overall. I guess the government's trying to be a
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  Speaker 3: bit more fiscally responsible because they realize that there's there's
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  Speaker 3: been more money going out and coming in the last
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  Speaker 3: couple of years, and sometimes that comes home to roost.
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  Speaker 3: So you know, for some people it's not necessarily not ideal.
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  Speaker 3: You know, the effect cost for most people if now
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  Speaker 3: contributing to QB sabers, two hundred and sixty dollars a
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  Speaker 3: year doesn't sound like a lot, but it does add
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  Speaker 3: up over time. You know, for those under one hundred
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  Speaker 3: and eighty thousand SORR, I've paid over one hundred and
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  Speaker 3: eighty thousand dollars, they lose it all together. Is it
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  Speaker 3: really going to make a difference people earning that high
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  Speaker 3: level of income. No, so maybe not necessarily ideal, but
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  Speaker 3: you know, you can't have everything.
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  Speaker 2: Yeah, yeah, it's interesting. It's going to be fascinating to
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  Speaker 2: see how it all, you know, unfolds over the next
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  Speaker 2: months and years. Thank you very much, Lisa. Important to
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  Speaker 2: point out too that I think the big changes for
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  Speaker 2: the contribution, for the government contribution, they don't come into
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  Speaker 2: effect until next year. So at the moment if you
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  Speaker 2: haven't if you like, if you're self employed, for example,
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  Speaker 2: and you want the government contribution, you could go in
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  Speaker 2: and do the minimum or do them do the one
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  Speaker 2: and forty two dollars. I think it's by the end
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  Speaker 2: of June, and if you've gotten in on time, so
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  Speaker 2: long as you've got it in on time, you will
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  Speaker 2: get the maximum government contribution for this year, which is
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  Speaker 2: what five hundred and twenty one dollars. So next year
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  Speaker 2: it'll be different, but you get the maximum contribution five
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  Speaker 2: hundred and twenty one dollars this year, so long as
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  Speaker 2: you make that contribution on time.
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