PBS Advisers

31/08/2021

Great time to get with the best.

Our Focused Growth Fund is 1st over 5 years out of all KiwiSaver Aggressive Funds*. Join 100,000+ Kiwis and enjoy awesome long-term returns too. 💪
Request a no-obligation call from our friendly team: https://www.generatewealth.co.nz/

*Source: Morningstar KiwiSaver Survey June Quarter 2021. Generate Focused Growth Fund ranked #1 over 5 years out of 10 KiwiSaver Aggressive Fund as of 30 June 2021. Product Disclosure Statement & advertising disclosures available at www.generatewealth.co.nz/pds.

The issuer is Generate Investment Management Ltd. Past performance is not a reliable indicator of future performance.

02/10/2019

More and more people are seeing the long term benefits of what this scheme can offer. Go to our FB page to book an appointment with me to find out more.

A growing number of superannuitants are keeping their KiwiSaver accounts going.

17/12/2018

Wishing you all a Merry Christmas.

17/07/2018

Over 400,000 KiwiSaver members who are in default funds may have missed out on $1 billion over the last six years because they are in the wrong type of fund and are being over-taxed, a group of nine financial advisers claim.
The advisers have written to the government and regulators calling for changes to be made to the retirement savings scheme and warn it is Kiwis who are least equipped to make investments decisions who are missing out.
Finance Minister Grant Robertson today received the letter but has not yet read it, a spokeswoman said.
Meanwhile, a spokesman for the Financial Markets Authority said the regulator had received the letter and was considering it.

People are automatically put in one of nine default KiwiSaver funds when they switch or start a new job and do not decide for themselves which fund to be in.
The funds are invested conservatively meaning the money is mainly in cash or bond investments which are lower risk and have lower returns.
The default funds were meant to act as a parking space for people's money to go to while they made a decision but instead members have remained there.
John Cliffe, an Auckland-based financial adviser who is the spokesman for the advisers, said a conservative strategy was incompatible with the overall purpose of KiwiSaver and effectively penalised long-term investors.
He said the decision to keep the decisions to keep the default funds conservative rather than balanced had resulted in members missing out on approximately $830 million over the six years ended 31 March 2018 - roughly $2.7m every week.
Cliffe said members were also staying in the default funds for too long.
"Default funds were designed as a 'temporary holding place' for new KiwiSavers from which they could be switched to a more appropriate fund.
"Yet for many default fund members, the switch has never taken place. Default fund managers have performed poorly in this regard."
As of March 31, 2012 there were 447,274 members in default funds - by March 31, 2017 it was 446,534.
"In those five years despite lower volumes of enrolments in default schemes the total number of members declined by only 740, while the value of funds increased by $2.9b to $4.6b in default funds, compounding the regulators conservative default fund selection error." An individual earning $40,000 a year could be potentially be $6000 worse off while someone on $60,000 a year could potentially be $8100 worse off.
Since 2014, when the government reviewed the default providers, there has been an obligation on them to provide financial literacy with the aim of getting people to move out of a default fund into a more appropriate fund.
But annual reports by the Financial Markets Authority show the numbers moving to another fund have been low.
The advisers claim bank default providers face a serious conflict of interest when it comes to getting people to switch because $1.5b money in the default funds is invested in their own bank products.
In 2018 the five bank default KiwiSaver providers on average had 34 per cent of their own default funds invested in bank products.
That compares to 11.7 per cent of balanced funds invested in the bank's own products.
The advisers also believe the Inland Revenue Department should give KiwiSaver providers a member's tax rate so individuals are taxed at the right amount.
At the moment it is up to members to ensure they are on the right prescribed investor rate and if they do nothing providers automatically charge the highest rate of 28 per cent and there is no way of clawing money back if people have overpaid the tax.
The advisers estimated default members have overpaid tax by $100m.
Cliffe said it was speaking out for default members despite them not being clients of the advisers.
"...this is a serious financial issue that has not and is not, being resolved," the advisers wrote in a letter addressed to the FMA, Reserve Bank, finance minister Grant Robertson and commerce minister Kris Faafoi.
"There are clear conflicts of interest with some default KiwiSaver providers. Some of the default providers have acted in their own interests, not in their default client's interests. ...it has cost some of the most vulnerable New Zealander's significant sums.
"It is both an inexcusable and continuing problem. The ethical standard of our industry has not been met by some of its most important institutions and government bodies."
Cliffe said he and the other advisers had been prompted to speak out by the Australian Royal Commission into misconduct in the financial services industry and over concerns that the regulators were not doing enough.
"The FMA, government ministers and others responsible for overseeing KiwiSaver have frequently asserted that better financial literacy education of default investors is required along with better fund manager performance in switching out default members to solve the problem.
"After a decade of failure with this approach it is time to take action."

12/07/2018

KiwiSaver has been a roaring success, gauging the number of people in it – 2.8 million of us are members.
But if you look at the number who aren't getting much out of the investment scheme, the results should be far better.
"Garbage in, garbage out," goes the saying, but with KiwiSaver it's more like "Nothing in, nothing out". We're simply not going to get results if we're not contributing.
Eleven years after KiwiSaver was introduced, we now have the benefit of hindsight and the data to show how people are actually using it, or not.

Happily there are promising changes in the pipeline set to come into effect next year that will improve our results.
A bill tabled in parliament is now working its way through to being made law later this year.

When holidays suck

When is a holiday not a holiday? When it's a contributions holiday. That's when you decide to stop contributing to your KiwiSaver for a while: the default time off is currently set at five long years unless you opt back in.
There's nothing wrong with having that option for dire circumstances, but it should only be a temporary break. That way you don't miss out on contributions from your employer, the government and investment returns. Until your "holiday" ends, you're leaving money on the table.
Five years! That's far too long. And "holiday" makes it sound way too positive.
So next April, assuming the bill is passed, "contributions holidays" will officially be renamed "savings suspensions", reflecting what they really are. And a suspension will only last one year before you start automatically contributing again. (Don't worry, you can suspend more than once, but at least there's a prompt every year to prevent your break lasting longer than absolutely necessary.)

Pumping more in to get more out

You know how the minimum rate to contribute is set at 3 per cent? That suggests that all you need to put in is 3 per cent to be set for your future. This may not be the case, depending on the lifestyle you want. (Have a quick look at your own numbers here.)
Then there are those two other rates to choose from, 4 per cent and 8 per cent. For a while I gave 8 per cent a try, but then had to ratchet back when things got tight.
But there wasn't an option between 8 per cent and 4 per cent, so I took a bigger drop than perhaps I needed to. On the other hand, many folks find that the jump from 4 per cent to 8 per cent is a bridge too far; something in the middle would be good.
Which brings us to the next welcome change to KiwiSaver: next April contribution rates will be expanded to 3 per cent, 4 per cent, 6 per cent, 8 per cent and 10 per cent. This will give us all more flexibility, and more control over the results we'll get over the long term.
How much of a difference could these various rates make to your final results? To give an idea, if you started earning $50k and were in KiwiSaver 45 years, your results might look something like this:
3 per cent = $310,000 4 per cent = $360,000 6 per cent = $463,000 8 per cent = $565,000 10 per cent = $668,000
And those numbers are after fees, taxes and inflation have done their thing, so those are real dollars.

KiwiSaver beyond 65

Right now, people above the age of 65 cannot join KiwiSaver, which sidelines them from the action. Sure they can stay in the scheme if they joined before turning 65, but a whole group of people above that age are being left out of what can be a lower-cost investment option.
There's no good reason for this, especially when the rule excludes those who keep working past 65 and whose employer would voluntarily keep contributing as well (our surveys show that around 25 per cent of employers do). And for Kiwis overseas who return home for their golden years, KiwiSaver could be a welcome place to park their nest egg and grow it further.
As of next July, over-65s will get to join KiwiSaver. And those who join after the age of 60 won't have to wait a full five years before accessing their savings, as they do now, So these are promising developments in the world of KiwiSaver that should soon become law. Still, it will always be "nothing in, nothing out" – to get the most out of KiwiSaver we need to keep contributing.

For more info, contact us to help you make the most out of your Kiwisaver.

03/07/2018

Analysis of the after fees and tax returns from KiwiSaver funds over the 10 years to March 31 found there was no instance where the cheapest 15 per cent of funds appeared in the list of the top 15 per cent of highest returning funds. https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=12081629

Cheaper isn't always better when it comes to KiwiSaver.

13/06/2018

#1 Kiwisaver Fund Manager for Growth Funds and has a Gold rating for 2016, 2017 & 2018 for service.

Generate is an award winning, New Zealand owned KiwiSaver specialist. We focus on providing top performance, great service and valuable advice to Kiwis.

13/06/2018

Generate Focused Growth fund is the #1 performing and therefore best value for money KiwiSaver Diversified Growth Fund. Returning 14.85% for the year after fees!
Is your Kiwisaver performing this well? Talk to us to find out how you can start getting this type of return.

Disclaimer: Past performance is not a reliable indicator of future performance. Returns are after fees and before taxes and administration fees. Results are from the FundSource website for KiwiSaver Diversified Growth Funds.

Generate is an award winning, New Zealand owned KiwiSaver specialist. We focus on providing top performance, great service and valuable advice to Kiwis.

08/06/2018

Free travel insurance for the life of your new medical policy.

Not only do you get full comprehensive private medical cover here in NZ, but free travel insurance which includes:

Cover for multiple trips overseas of up to 38 days

Cover for all insured on the policy

Unlimited emergency medical expenses incurred overseas

Emergency dental expenses overseas

Emergency medical evacuation and repatriation

Cancellation costs

Cover for luggage and personal effects

Personal liability

Contact us for more information.

Regards
PBS Advisers team

26/02/2018

PBS Advisers are back again at the up coming North Shore Home and Garden Show. Show this Voucher to get 2 for 1 entry. Dont forget to stop in at the stand and grab a few lollipops.

See ya there.

Share, Share, Share.

08/08/2017

Be into win 1 of 3 double passes to the Auckland babyshow. To enter just complete our short Kiwisaver survey.

http://www.generatekiwisaver.co.nz/kiwisaver-survey/PBS01