Chances are you’ve been hearing a fair bit about the new KiwiSaver scheme, but do you actually know what it all means for you?
With the help of the nice people at www.sorted.org.nz we’ve pulled together all the details and figured out the pros and cons, so that you can make an informed decision about joining.
Signing up From July 1 if you start a new job you’ll be automatically opted in to KiwiSaver. You’ll then have to decide whether to stay in or opt out. If you'll still be in your existing job you can choose to opt in to the scheme from this date.
Should I join? This is not a decision to be made lightly and there are pros and cons each way. To decide you’ll need to have a handle on your personal finances and know exactly how KiwiSaver will affect them.
Firstly you’ll need to ask yourself: Can I afford to save 4% of my pay?
Helpful tools What will the impact be on your financial situation? While 4% doesn’t seem like much, when you crunch the numbers you may find it adds up to a significant chunk of your take home pay. To help you make an informed decision the Retirement Commission has developed two tools – an online financial health check, Sort Me, and the Sorted KiwiSaver Decision Guide.
Step One: Sort Me. This online tool asks a series of multi-choice questions about your financial situation and arrangements in eight personal finance areas. Then it gives you a really good picture of how financially sorted you are now, and suggests simple ways you could improve your situation. Click here to get started.
Step Two: The Sorted KiwiSaver Decision Guide. Once you have the above information it’s time to work your way through Step Two. The guide takes you through the main details of KiwiSaver and offers some reasons for and against joining. Click here to get started.
Reasons for joining KiwiSaver
You can afford to contribute 4% of your pay
Your employer will make a contribution from the start of KiwiSaver in July, not just from 1 April 2008
You plan to buy your first home any time in the next 3-5 years and you expect to be eligible for the first home subsidy
You have no high interest debt (e.g. credit card, hire purchase) and know it’s time you start saving for your retirement.
Reasons against joining KiwiSaver
You can’t afford to contribute 4% of your pay, or would rather pay off high interest debt (e.g. credit card, hire purchase) before saving
You don’t want your savings locked away until you're 65
You are already a member of (or are able to join) a superannuation scheme that your employer contributes to, or you already have a comparable retirement income plan in place.
KiwiSaver gives you a trigger to think seriously about your money situation. If you're anything like me, retiring seems too far away to think about, but I do know that when I'm ready to stop working I want to be able to afford to enjoy my life!
Whatever your age or stage it’s important to plan for your future – whether it be to pay off debt or prepare for retirement. Just make sure you're making a well-informed decision that works for you personally and don't be swayed by what everyone else thinks.
Gemma
Head to www.sorted.org.nz for advice on KiwiSaver along with a wealth of other personal finance and budget information.
Signing up
Step One: Sort Me. This online tool asks a series of multi-choice questions about your financial situation and arrangements in eight personal finance areas. Then it gives you a really good picture of how financially sorted you are now, and suggests simple ways you could improve your situation. 
KiwiSaver gives you a trigger to think seriously about your money situation. If you're anything like me, retiring seems too far away to think about, but I do know that when I'm ready to stop working I want to be able to afford to enjoy my life!