Kiwis urged to future-proof retirement now

3 October 2011

Kiwis urged to future-proof retirement now

CANSTAR CANNEX releases inaugural KiwiSaver star ratings report.

Retirement may be light years away but right now is the best time to make a plan of action that should include opening a KiwiSaver account sooner rather than later.

According to leading financial research and ratings company CANSTAR CANNEX, the current financial situation is a wake-up call and Kiwis should take steps to plan for their retirement now.

“KiwiSaver may or may not become compulsory in the future, however we urge people to take advantage of the generous government incentives and employer contributions now because these will pay off as the years go on,” CANSTAR CANNEX NZ National Manager Derek Bonnar said.

“Who knows what level of government support will be available in your retirement so failing to plan for your retirement may see you disappointed at the end of your working life.”

Mr Bonnar points to the current financial climate as a strong advocator for Kiwis to plan for their own retirement. The current situation in Greece and Italy shows that there is no guarantee that governments will continue to provide the same level of support to future retirees He strongly encourages Kiwis to be proactive in planning for their retirement.

“The upside is that if you are lucky enough to still receive a government benefit at retirement, having your KiwiSaver investment in place as well, will be as good as hitting the jackpot, so it’s a win-win all round,” Mr Bonnar said.

“For most Kiwis starting a KiwiSaver account as early as possible means time is on your side and you can ride the market volatility to eventually benefit from your investments. Your balance will also grow through the power of compound interest when you start early and make small, regular investments.”
“Besides, there are very few investments where you get $1,000 for simply opening an account.”

Recognising the importance of KiwiSaver, CANSTAR CANNEX researched and compared 91 KiwiSaver Funds offered by 29 KiwiSaver Schemes to determine those Funds offering five-star value.
Three KiwiSaver profiles were rated – Conservative, Balanced and Growth – focussing on price and features of the products.

“We did not rate performance because it is too difficult to accurately pin point future top performers, and past performance certainly does not guarantee future performance,” Mr Bonnar said.

There were a number of Funds that stood out in the CANSTAR CANNEX KiwiSaver star ratings.
“ASB and SuperLife impressed by scoring five stars in all categories. These Funds deserve our congratulations for offering New Zealanders an impressive range of competitively priced and well featured products across all profiles,” Mr Bonnar said.

“Other five star winners include FirstChoice in the conservative profile and OnePath in the balanced profile. The strong showing by these Funds proves that competition in the market is keen and this can only be of benefit to consumers.

CANSTAR CANNEX has put together 5 reasons to start your retirement savings now.
1. Time is on your side
Don’t make the mistake of trying to pick the right time to get into the market. The earlier you start, the better placed you will be in the long run because you have time to ride out the volatility.
2. Harness the power of compounding interest
Starting early and making small, regular investments can see you end up with a handsome retirement nest egg. This is because of compound interest kicks in when your investment earnings are credited back to your account.
3. Dollar cost averaging
By starting to invest early, you benefit in the long term because you out the average dollar cost to get into the market.
4. First Home Buyer deposit subsidy
Being a KiwiSaver for 5 years makes you eligible for a government grant of up to $10,000 to help you get your first home.
5. Money for nothing
Why look a gift horse in the mouth? There are very few investments where you get $1,000 for simply opening an account. What’s more, KiwiSaver contributions up to $1042.86 per year receive a 50% government “member tax credit”.

The full KiwiSaver star ratings report can be downloaded on http://www.canstar.co.nz/

ENDS

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