Co-author: Michelle Norton
Despite the huge life events KiwiSaver savings are going towards (retirement and sometimes a first home) some investors barely glance at their KiwiSaver statements, let alone use the information to help them with investment decisions.
In fact, 11% of KiwiSaver members don’t read information they receive from their provider, and a further 21% read it but don’t understand it, according to 833 KiwiSaver members who answered the question in Canstar’s research.
Canstar has five tips on what to look out for in your KiwiSaver statement and how it could help you to make more informed decisions about your fund and provider.
Read Canstar's full KiwiSaver report
1. What type of fund are you invested in?
Your annual statement will show you what type of fund your KiwiSaver money is invested in. Is it Cash, Conservative, Balanced, Growth or Aggressive?
Deciding on a suitable fund will be influenced by factors such as your risk profile. Are you content with slow, but hopefully safe and consistent growth? Or, are you willing to take on more risk in the hope of greater returns?
We have written more on the different types of KiwiSaver funds, here.
If you don’t think your current fund suits your risk profile, you should be able to switch easily and even stay with your current provider, if you’re happy with your current choice.
2. Are your contribution deposits all there?
Just like you check your bank account to see that your pay has gone in, it is vital to check your KiwiSaver statement to see that all of your contributions are listed as credits in your statement. This includes the contributions from your before tax pay (money deducted from your paycheck) and the employer contributions.
It’s easy to check your contributions have gone in, between statements or at statement time:
- Log onto the My KiwiSaver
- With some KiwiSaver funds, you can even check whether your Kiwisaver balance has gone up with an app on your smart watch or smartphone!
Keep in mind that it takes about three months for a KiwiSaver payment to go through Inland Revenue and into your KiwiSaver account.
Compare KiwiSaver providers with Canstar
3. Has your money grown?
All regular savers should see their KiwiSaver balance grow by the amount of contributions they and their employer have made, plus the annual member tax credit, less administration fees, less tax paid.
On top of that, there should be some investment growth in terms of returns on your investment. Your fund statement should show all of these figures.
For more information about performance versus fees, check out this article and have a read of our latest KiwiSaver report.
4. What fees have you been charged?
Management fees, administration fees and other fees eat into the growth of your KiwiSaver balance. From this year onwards, KiwiSaver providers must display their fees as a dollar figure, not just a percentage, in their annual statements.
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As part of Canstar’s annual KiwiSaver research, we have looked at the minimum, average and maximum fees across the various fund types. For some fund types, the difference in fee levels is in the hundreds of dollars. While fees do need to be kept in perspective with the type of fund – and the returns – it is well worth checking exactly how much you’re being charged.
And if you think you might like to switch providers, check out what is available on the market.
Compare KiwiSaver providers with Canstar
5. Are you paying the right tax?
Your statement should have your PIR (Prescribed Investor Rate) on it. It’s worth checking that you are being charged tax at the right rate. See the KiwiSaver government website or the Inland Revenue website to check which rate you should be on as your PIR.
PIR tax rates vary according to a person’s income over the past two years. The different tax rates are 10.5%, 17.5% and 28%. Non-residents have a PIR of 0%.
There’s a big difference between being taxed at 10.5% and taxed at 28%, so it’s vitally important to get interested in the detail of your statement before you retire.
The PIR also depends on your tax residency status. See the Inland Revenue page on working out your PIR for more information.
Anyone who gets their PIR wrong could be throwing money away by paying too much tax – and this can’t be claimed back.
If these tips have left you wondering about what other providers and funds are available, you can easily compare and contrast using Canstar’s KiwiSaver comparison tools. Just hit the button below to start comparing your KiwiSaver options.
Compare KiwiSaver providers with Canstar
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