Hi there,
It’s getting cold as we are heading into the winter season. I hope you have been keeping warm.
Latest on KiwiSaver
To follow up on last month’s newsletter, the market has bounced back up since then. Hence, we always encourage most people not to change the fund types, especially from growth to conservative, as you would have locked in your losses.
There are some huge announcements for KiwiSaver this week!
Here are the changes below:
- From 1 July 2025, the government’s contribution will reduce from 50 cents to 25 cents for every dollar contributed by members, up to a maximum of $260.72 per year. However, to receive the full contribution, you will still need to contribute a minimum of $1,042.86 a year.
- The contribution rate increases from 3% to 4% by April 2028. From 1 April 2026, it will shift to 3.5%, before increasing again to 4% on 1 April 2028.
- KiwiSaver government contributions and employer matching will now be extended to 16- and 17-year-olds.
- Government contribution will be removed for KiwiSaver members with taxable income over $180,000 annually.
One of the things I like about these changes is to increase the contribution rate to 4%. If you contribute more and earlier, you will see and experience the eighth wonder of the world – compound interest.
If your KiwiSaver’s balance reaches $100,000, it will really take off by itself. In Australia, the minimum contribution of their superannuation is 12% this coming July. I always recommend to contribute 10% if you can. It will not take long to reach $100,000. The best way to increase your KiwiSaver contribution is to talk to your employer or HR to adjust your employee contribution.
Please get in touch with me if you would like to review and get some advice on your KiwiSaver account.
Insurance that protects you and your family
It’s always a good idea to review your insurance regularly. There is nothing more important than knowing that you have insurance in place to protect yourself and your family.
Common insurance covers in New Zealand:
Life Insurance: lump sum tax free pay-out in the event of your death or you are diagnosed with a terminal illness. Includes payment for your funeral.
Trauma/ Critical Illnesses: lump sum tax free pay-out if you are diagnosed with a critical illness or trauma, the most common being heart, stroke or cancer. Leading insurers offer up to 57 conditions these days. Sadly, cancer is now NZ’s number one claimed condition.
Income Protection: is a monthly pay-out to help you pay for your living expenses in the event of illness or a serious accident. Can be structured as Mortgage Repayment Insurance or based on Household Expenses (Renters) – both of which pay-out on top of any ACC income pay-out due to an accident.
Health Insurance: enables one to get to the front of the queue in the event of illness for medical treatment. Comprises Hospital Base plan and a Specialists and Tests option. (G.P., vision and dental modules are available but can be pricey).
Let me know if anything has changed for you or if you’d like to catch up.
Warm regards,
Bourne Wong
