Monday, August 27, 2007

The Pain of Kiwisaver

I already had a retirement savings scheme going on, $50 a fortnight tucked away into a unit trust with the National Bank. So why on earth would a sane rational person sign up for kiwisaver too?

Quite frankly I'm not sure why anyone on a medium type income hasn't already. My unit trust was returning a fairy crap 3% or less return most years, my martini drinking aspirations of my retirement were looking grim and I was having to develope a taste for meths in anticipation. However with kiwisaver I can get an almost %100 return in the first year. My %4 deductions come close to $2000. I also get the $1000 kick start and the $1040 government subsidy in the first year. In later years I will have the employer subsidy to make up the government carrot being taken away. (The subsidy will eventually be %4, essentially matching dollar for dollar my own contributions, so still a %100 percent return on investment)

Of course who knows what National will do to the scheme. It could end up with the same pathetic return as my old unit trust. But thats precisely why I signed up before the next election. I'm trying to get as much free money as I can before John Key ruins everything.

There has been some debate around the office. Some of the older set, having been burned by governments before on super believe that National plans to take all the subsidies back. This sounds ridiculous to me but who knows what kind of power the government really has in such matters. I cannot find anything in the paperwork about it. I still think the outrage levels would be to high if the ever attempted such a thing. National wouldn't be in power very long and would lose my vote (not that they ever had it).

My only problem is that I miss that $74. Our mortgage repayments are pretty high (we switched from a 30 year mortgage to a 20 year repayment framework) and I had little disposable income left after paying all the bills. Plus theres still the pain of my student loan repayments. My only hope for salvation is the pay rise I'm supposed to get this week. I don't think it'll be much after everyone takes their cut (and by everyone I mean the IRD) but it should be enough to dull the pain of saving for retirement.

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