Watching the trailer for Fair Go last week I was left wondering what on earth could have happened that would make a young boy (age seven) warn people against KiwiSaver. I guess it got the right reaction in that I just had to watch it.
Following the item on the TV I fully expected to be inundated with calls the next morning from worried parents and grandparents. I must have explained it well enough as this didn’t happen.
I found it a concern that no mention was made about being able to take a payment holiday 12 months after the first contribution (the Act defines a contribution as: “any contribution to a KiwiSaver scheme, including an employer contribution and a Crown contribution”). Certainly older children who are in a position to work and pay PAYE just as the 17 year old featured was would have to pay 4% of their income but as for the seven year old saying he was “stuck” in KiwiSaver….
KiwiSaver is not a place to save for education, weddings, overseas travel or anything short term. It is what it was designed as – an investment vehicle for retirement. This doesn’t mean that kids can’t benefit from KiwiSaver even if they never ever make a contribution themselves. The effect of compound interest on their $1,000 kick start should teach them about the importance of starting early. This surely is a valuable lesson. So Fair Go, don’t forget to publish all the facts and indeed give KiwiSaver a fair go.
