Ensuring Fairness and Providing Assistance
In an effort to support families, and promote financial fairness, the government has created legislation that is designed to help parents with their KiwiSaver savings while they take parental leave. This step in legislation has been approved and is being implemented within a Taxation Bill.
Under this new law, the government will cover the 3% employer contributions to KiwiSaver accounts for any working Kiwi that is on parental leave. However, it’s important that working Kiwis continue making their own contributions to their KiwiSaver in order to receive this support from the government.
Finance Minister, Nicola Willis, has said that this government support is designed to help in addressing the retirement savings gap between genders. Women often have smaller retirement savings than men. By continuing their KiwiSaver contributions during parental leave, the government aims to help bridge this gap.
The Taxation Bill, expected to become law before April 1, 2024, represents a significant step in the government’s efforts towards more widespread financial stability, addressing gender inequalities, and repairing the New Zealand economy.
Charting the Future: Expert Perspective
Director and Financial Advisor at National Capital, Clive Fernandes, says that KiwiSaver plays a critical role in securing a stable retirement. “KiwiSaver is a valuable resource that provides individuals with a structured approach to long-term savings, making it essential for achieving financial security in retirement.”
Fernandes is confident that the recent legislative changes that support KiwiSaver contributions during parental leave “will positively impact individuals’ financial stability.”
By continuing to contribute to KiwiSaver funds during parental leave, individuals and families will be empowered to keep saving and will more effectively achieve long term financial stability and security.
Striving for Ideal Commitment
Data is showing that KiwiSaver contributions have declined recently. According to findings outlined in their KiwiSaver Value for Money report, the National Capital KiwiSaver Contribution Index has recently declined to 4.27%. This is quite a bit lower than the recommended benchmark of 6.30%. It is a concerning statistic because KiwiSaver savings are designed to help Kiwis in their retirement! Based on the current rates of contributions, middle-aged Kiwis will likely not have enough funds in their KiwiSaver when they reach retirement. It is important to make sure that you are contributing enough to ensure you will hit those retirement goals and savings!
Their analysis suggests that the decline in contributions to KiwiSaver is likely because of the continued rising costs of living in New Zealand. As more Kiwis feel the pinch of increased bills, more are choosing to prioritise immediate financial obligations, such as rent and utilities, over long-term retirement savings – in other words, many Kiwis are making the choice to pause their contributions so they can pay their bills!
National Capital urges Kiwis to remain consistent with their KiwiSaver contributions where they can. For parents on leave, they will have support from the government to help them reach their long-term goals.
Embarking on Your Money Journey
Even with government support, it can be challenging to reach your retirement goals. KiwiSaver plays a major role in your financial future, so it is important to be proactive about your budget and seek help when you need it. If you want to make sure you reach your retirement goals, this is what you can do:
Keep track of where you are spending your money. It’s always a good idea to create a budget that you can understand, and easily refer to. Check out your KiwiSaver options and consider how you can save more. There are plenty of ways to get smarter about your money and where it’s going: chatting with experts, browsing online, or joining workshops – it can all help you make better choices with your KiwiSaver.
It’s important to remember that what works for one person, might not work for you. Everyone has different budgets, expenses, and goals! Never just copy what someone else is doing and always find out what is right for you. One way is to get a KiwiSaver Healthcheck from National Capital, a KiwiSaver advice firm. It's a great way to figure out the best plan for you and ensure your future looks bright.
