Kiwisaver case studies

ANDREA VANCE

The Government provided a series of examples calculated to show how the changes to Kiwisaver will affect New Zealanders.

1. 35-YEAR-OLD COUPLE ON AVERAGE HOUSEHOLD INCOME

Ben and Megan, 35, have a combined income of $77,000. Ben works full time, bringing home $52,000 a year and Megan, part-time, earning $25,000.

They join Kiwisaver in April 2013 and contribute 3 per cent of their gross wages - the new minimum rate.

Ben pays in $29.92 a week and his employer contributes 3 per cent: $24.68 a week after tax. The annual Member Tax Credit gives him the equivalent of $10 a week in government contributions.

Megan contributes $14.38 a week, her employer $11.87, and she receives the equivalent of $7.19 in government contributions.

By age 65, they would have combined saving of around $247,500, giving them a gross income of a year $15,000. The couple would also be entitled to New Zealand superannuation.

2. 50-year-old existing member on average wage.

Emma earns $50,000 a year and joined Kiwisaver in 2007, contributing 4 per cent. She now contributes 2 per cent or $19.18 a week, matched by her employer and the same amount in government contributions.

From April 2013, her minimum contribution will rise to 3 per cent - $28.77 a week -as will the employers contribution - $23.73 a week after tax . The government contribution will rise to the equivalent of $10.

By age 65 she would have around $75,000, giving an income of around $4,500.

3. 50-year-old couple with household income of $100,000

Jeremy earns $75,000 a year, Chloe works part-time, bringing home $25,000 a year.

They both join Kiwisaver in April 2013, contributing 8 per cent of their gross wages.

Jeremy contributes $115.07 a week, his employer three per cent: $30.21 after tax, the government the equivalent of $10.

Chloe contributes $38.36 a week, her employer three per cent: $11.87 after tax and the government contribution is the equivalent of $10.

By age 65 their combined savings would be $217,500 giving a gross income of about $13,000 a year.

If they contributed 4 per cent their savings would be $140,000- or about $8,500 a year.

4. 30-year-old couple, each earning $45,000, contributing 4 per cent and intending to use the first home buyer subsidy.

Bechi and Dan join Kiwisaver in April 2013 contributing $34.52 a week each.

Their employers contribute 3 per cent - $21.36 a week.

The government contribution is $10 a week.

After three years, they could be eligible for a first home deposit subsidy of $3,000, which increases to a maximum of $5,000 after five years.

They can also withdraw the contributions and fund returns.

After five years they would have around $36,000 available for withdrawal, which added to the subsidy, would give them a deposit of $46,000.

If they used this maximum amount, by aged 65 they would have a balance of $345,000, giving an income of $21,000 a year.

5. An 18-year-old on the minimum wage

Blair earns just over $27,000 a year and joins Kiwisaver in April 2013, contributing 3 per cent, or $15.60 a week.

His employer also puts in 3 per cent - $12.87 a week after tax.

He gets the equivalent of $7.80 a week from the Government.

When he reaches aged 65 he would have about $195,000 - an income of around $11,500 a year.

- © Fairfax NZ News