Opting into Kiwisaver and didn't know the consequence

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Forums › Finance and wealth management › Opting into Kiwisaver and didn't know the consequence

tombrownzz

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#69876 14-Oct-2010 18:05

A mate of mine just started new employment a few days ago and his employer gave him a kiwisaver enrollment paper and he signed up. My mate just found out he cannot opt out because he 'chose' to join:

http://www.kiwisaver.govt.nz/new/opt-out/

Is there anyway he can opt out of it?

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#391906 14-Oct-2010 18:19

tombrownzz: A mate of mine just started new employment a few days ago and his employer gave him a kiwisaver enrollment paper and he signed up. My mate just found out he cannot opt out because he 'chose' to join:

http://www.kiwisaver.govt.nz/new/opt-out/

Is there anyway he can opt out of it?

If he signed into it, then I don't think so. However when you start a new job don't you automatically get enrolled without signing anything, and then you can choose to opt out? So why did the empl,oyer get them to sign a document?

alasta

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#391909 14-Oct-2010 18:24

If he signed up without reading through the detail then he only has himself to blame.

It is possible to stop your contributions by going on a 'payment holiday' which can theoretically be indefinite as there is no limit to the number of consecutive payment holidays you can take, but I think you have to be enrolled for a certain period of time before you are eligible for this. The Kiwisaver web site has all the detail on this sort of thing.

robbyp

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#391923 14-Oct-2010 18:52

alasta: If he signed up without reading through the detail then he only has himself to blame.

It is possible to stop your contributions by going on a 'payment holiday' which can theoretically be indefinite as there is no limit to the number of consecutive payment holidays you can take, but I think you have to be enrolled for a certain period of time before you are eligible for this. The Kiwisaver web site has all the detail on this sort of thing.

The holiday is also subjective, as the kiwisaver provider has to agree that you can go on the holiday. It is normally if you are going through hardship, or have a mortgage to pay, and you probably have to provide some evidence. That is one thing I don't like about kiwisaver, the fact that you can't opt out later on. I guess however it will be irrelevant, as eventually it will probably become compulsory.

wellygary

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#391927 14-Oct-2010 19:08

robbyp:
The holiday is also subjective, as the kiwisaver provider has to agree that you can go on the holiday. It is normally if you are going through hardship, or have a mortgage to pay, and you probably have to provide some evidence. That is one thing I don't like about kiwisaver, the fact that you can't opt out later on. I guess however it will be irrelevant, as eventually it will probably become compulsory.

Only in the first 12 months, after that you can decide yourself whether you want a holiday or not

http://www.kiwisaver.govt.nz/already/change-contrib/contributions-holiday/ks-holiday.html

Regs

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Snowflake

#391994 14-Oct-2010 21:56

if the only form filled in was a KS2 http://www.ird.govt.nz/resources/c/c/ccc0fe004bbe574eadbbfdbc87554a30/ks2.pdf then you have a period of time where you can opt out:

"If you?re not already a KiwiSaver member, you will be automatically enrolled and your employer will begin making KiwiSaver deductions
from your first payment of salary or wages. However, you can opt out at any time on or after day 14 and on or before day 56 of starting new employment?see your KiwiSaver information pack for details"

there is nothing on the form that says that you are unable to opt out if you "choose" to fill in the form so they can't force that condition on you...

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tombrownzz

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#392031 15-Oct-2010 00:14

Regs: if the only form filled in was a KS2 http://www.ird.govt.nz/resources/c/c/ccc0fe004bbe574eadbbfdbc87554a30/ks2.pdf then you have a period of time where you can opt out:

"If you?re not already a KiwiSaver member, you will be automatically enrolled and your employer will begin making KiwiSaver deductions
from your first payment of salary or wages. However, you can opt out at any time on or after day 14 and on or before day 56 of starting new employment?see your KiwiSaver information pack for details"

there is nothing on the form that says that you are unable to opt out if you "choose" to fill in the form so they can't force that condition on you...

https://www2.kiwisaver.govt.nz/interact/services/kiwisaver/optout/

"You can't opt out of KiwiSaver if you opted in."

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Regs

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Snowflake

#392042 15-Oct-2010 00:53

tombrownzz:
Regs: if the only form filled in was a KS2 http://www.ird.govt.nz/resources/c/c/ccc0fe004bbe574eadbbfdbc87554a30/ks2.pdf then you have a period of time where you can opt out:

"If you?re not already a KiwiSaver member, you will be automatically enrolled and your employer will begin making KiwiSaver deductions
from your first payment of salary or wages. However, you can opt out at any time on or after day 14 and on or before day 56 of starting new employment?see your KiwiSaver information pack for details"

there is nothing on the form that says that you are unable to opt out if you "choose" to fill in the form so they can't force that condition on you...

https://www2.kiwisaver.govt.nz/interact/services/kiwisaver/optout/

"You can't opt out of KiwiSaver if you opted in."

you cant point to a FAQ on a website as a term and condition of a signed document. If its not stated on the document, it cannot apply.

In any case, i think the "chose" or "opted in" part of that applies to when you write off to a provider yourself - not if you get 'automatically' enrolled by filling out the KS2 form for your employer..

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robbyp

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#392045 15-Oct-2010 01:04

Regs:
tombrownzz:
Regs: if the only form filled in was a KS2 http://www.ird.govt.nz/resources/c/c/ccc0fe004bbe574eadbbfdbc87554a30/ks2.pdf then you have a period of time where you can opt out:

"If you?re not already a KiwiSaver member, you will be automatically enrolled and your employer will begin making KiwiSaver deductions
from your first payment of salary or wages. However, you can opt out at any time on or after day 14 and on or before day 56 of starting new employment?see your KiwiSaver information pack for details"

there is nothing on the form that says that you are unable to opt out if you "choose" to fill in the form so they can't force that condition on you...

https://www2.kiwisaver.govt.nz/interact/services/kiwisaver/optout/

"You can't opt out of KiwiSaver if you opted in."

you cant point to a FAQ on a website as a term and condition of a signed document. If its not stated on the document, it cannot apply.

In any case, i think the "chose" or "opted in" part of that applies to when you write off to a provider yourself - not if you get 'automatically' enrolled by filling out the KS2 form for your employer..

I think it is in 'law' as it is written in the government legislation for kiwisaver. That would override any t&cs in the documents.

geekiegeek

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#392050 15-Oct-2010 05:56

Stay in, its well worth it.

bazzer

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#392087 15-Oct-2010 09:09

robbyp:
Regs:
tombrownzz:
Regs: if the only form filled in was a KS2 http://www.ird.govt.nz/resources/c/c/ccc0fe004bbe574eadbbfdbc87554a30/ks2.pdf then you have a period of time where you can opt out:

"If you?re not already a KiwiSaver member, you will be automatically enrolled and your employer will begin making KiwiSaver deductions
from your first payment of salary or wages. However, you can opt out at any time on or after day 14 and on or before day 56 of starting new employment?see your KiwiSaver information pack for details"

there is nothing on the form that says that you are unable to opt out if you "choose" to fill in the form so they can't force that condition on you...

https://www2.kiwisaver.govt.nz/interact/services/kiwisaver/optout/

"You can't opt out of KiwiSaver if you opted in."

you cant point to a FAQ on a website as a term and condition of a signed document. If its not stated on the document, it cannot apply.

In any case, i think the "chose" or "opted in" part of that applies to when you write off to a provider yourself - not if you get 'automatically' enrolled by filling out the KS2 form for your employer..

I think it is in 'law' as it is written in the government legislation for kiwisaver. That would override any t&cs in the documents.

I think Regs is right, but it really comes down to did he opt-in or was he simply enrolled as a result of his new employment. I'm sure it will be the latter, in which case he will have no trouble opting out. Has he actually tried? There's not really any difference in the process between opting in and automatic enrolment, just whether it's a new job or not. Out of interest, what is his provider?

Bear in mind you can only opt out after 14 days and before 56 days in the new job.

Edit: Agree with geekiegeek, stay in if he can. 2% is not too much of a burden, he'll get 2% from his employer and matched by the goverment up to $1,040. So, $3 for every $1 he puts in, it's a no brainer!

Byrned

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#392175 15-Oct-2010 11:48

Just try the opt out anyway. No harm in trying.

Recently started a new job and "opted out" even though I had been in kiwisaver in my last job. Long story short was I forgot to "opt out".

Once you're in kiwisaver you can't "opt out", however, they automatically gave me a 5 year contributions holiday, which as mentioned above, you can easily extend.

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CADMAX

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#392405 15-Oct-2010 21:38

i'm thinking of joining, what are the pros and cons?
i have mates that think its dam good and others that say stay away.

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

Regs

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Snowflake

#392420 15-Oct-2010 23:17

CADMAX: i'm thinking of joining, what are the pros and cons?
i have mates that think its dam good and others that say stay away.

pros:
- forced savings
- cant take out the money until retirement
- employer matches 2%, will increase over time
- govt top ups
- managed investments with choice of providers and risk levels

cons:
- forced savings of min 2% per month (contributions holiday available)
- cannot withdraw until retirement
- managed investments carry some risk

if you're young and havent yet bought your first house, then after a few years (is it 5?) you can withdraw a whole bunch of cash to put down as a deposit for your first house.

personally i think its a good thing, if you can afford to 'lose' the minimum 2%. if you cant make ends meet as it is, then you're not going to want to opt-in.

GST: remember that you dont have to pay GST on savings. if you put funds into kiwisaver, its one way to dodge the tax increase :)

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Linuxluver

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#392436 15-Oct-2010 23:45

tombrownzz: A mate of mine just started new employment a few days ago and his employer gave him a kiwisaver enrollment paper and he signed up. My mate just found out he cannot opt out because he 'chose' to join:

http://www.kiwisaver.govt.nz/new/opt-out/

Is there anyway he can opt out of it?

My employer matches my contributions so it's free money. I'll take it. Ta. Plus the govt puts in some money too. Ta, again.

The only issue I have with Kiwisaver is it goes to fund managers who then put it in the share market....and I;ve learned several times over past 30 years that the share market is mug's game unless you pick the winners precisely....and fund managers do a lousy job of that. My AMP super fund is still worth less than it was 3 years ago.

I've built equity much more effectively by buying a house and paying the mortgage off as fast as is humanly possible. Then you have an asset you can use to make some real investments.

But there are no short cuts. You can either save......or face the fact you'll be cash rich while the good pay lasts....but asset poor to the end of your days.

For many people, the only savings they will ever be able to accumulate without pillaging it for short term consumption is Kiwisaver....

Some things to bear in mind:

1. Plan for having your income cut in half between 45 and 55. Why? Look around you. When you go *anywhere*, how many people do you see working over 50? What kind of jobs are they doing? What do you think they are being paid? Have a close look. If you haven't accumulated a solid asset base by then, you might find you can't do it at all.

2. Your current job may not even exist in 20 years. Maybe it left the country and went somewher cheaper. Maybe technology means a small grey box in a closet somewhere does it now. Maybe so many people will do it for cheap you can't get a decent wage for it any more.

So think hard before you toss aside methods that force you to save money you might not otherwise save.

I don't sell Kiwisaver or any other thing. But I do know a lot of people over 50 who have sweet FA in terms of saving, having lived for the day a few days too many.....and every prospect of remaining in that state now as it's hard for "old' people to get decent jobs.

So if you're 25 or 35 and think you're onto a good thing and it - and you - will go on forever just like that.....Sorry....probably won't happen. It doesn't have to be a disaster when/if it evolves that way - restructuring or "bureaucracy cutting"...or whatever the particular event or excuse......(we can't all be doctors and dentists) but you have to plan for that day, in case it comes, in order to avoid the worst of it.

Kiwisaver can't hurt.

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I've been on Geekzone over 16 years..... Time flies....

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Snowflake

#392449 16-Oct-2010 00:55

Linuxluver:
The only issue I have with Kiwisaver is it goes to fund managers who then put it in the share market....and I;ve learned several times over past 30 years that the share market is mug's game unless you pick the winners precisely....and fund managers do a lousy job of that. My AMP super fund is still worth less than it was 3 years ago.

for the risk-adverse, you can opt for a "Cash" investment fund instead. Those are not invested in the sharemarket and basically deliver the same as a bank deposit (less the management fees, of course). My parents were both close to 65 when they started kiwisaver so i ensured that they enrolled in case funds.

for the 'younger' people - people who are expecting to be around for another 30+ years before they draw on kiwisaver - the managed funds with shares are not so bad as the sharemarket still tends to rise in the long term. if you go for the higher risk funds - the growth funds - you might find some pretty decent gains after several years.

as has been illustrated over the recession and financial crises though, shares can have big downward movements. some of the funds that started as $1 per unit dropped well under that. if you were in it for the short term, well - sucks to be you! for those of use in it for longer, sure some unitslost value for a couple of years. while they were low, we were also buying units for less than $1. now those units we bought for less than $1 are worth over $1... which represents some pretty decent gains. Also, while the units were less than $1 we bought more of them as we were still investing the same amount.

my fund - fisher funds, which is a growth fund - has had 15% growth over the last two years and has a 3% growth since the fund launched. during the worst of it in nov/dec 08, each $1 unit was worth less than 70c i think. i'm not sure what the current balance is, but i'm usually pretty happy when i see it given that i would have nothing saved otherwise..

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