Many New Zealanders have the mistaken belief that once they get to 65, they have to pull their money out of KiwiSaver, AMP New Zealand’s general manager of investments and insurance, Therese Singleton, says.
Wednesday, August 5th 2015, 6:00AM
by Susan Edmunds
She said leaving money in KiwiSaver through a retiree’s decumulation phase offered more freedom and potentially better returns than term deposits.
“In the past, many retirees have favoured term deposits because they are easy to understand and viewed as low risk. With the AMP KiwiSaver Scheme we have a great investment alternative for people over the age of 65.”
In the last financial year, the AMP KiwiSaver Scheme Conservative Fund earned 8.2% returns and for the same period, one-year term deposit rates for the major banks ranged from 4-4.35%.
Interest rates and returns from KiwiSaver scheme provider conservative funds may vary from year to year, but Singleton said KiwiSaver also offers retirees additional benefits.
“Unlike a term deposit, where you may have to wait for 31 days to take your money out, once you reach 65 you can make partial or full withdrawals from your account whenever you need to as long as you have been a KiwiSaver member for five years,” she said. “You can also continue to make contributions should you decide to return to work but what many people don’t realise is that once you reach 65, if you leave KiwiSaver, you can’t get back in. Maintaining your KiwiSaver membership into retirement means you can keep your options open.”
She said KiwiSaver was one of the few products that had its fees formally regulated, so it offered good value for money compared to other investments such as managed funds.
Even people who were nearing retirement could join the scheme, collect member tax credits for five years and then be left with an effective and affordable product to help them manage their retirement income, she said.
Some would need to change their fund to a more conservative option if they were reliant on their KiwiSaver funds but other retirees could opt for a riskier investment and treat it as an investment vehicle for part of their retirement plan.
“Plus, with a scheme like the AMP KiwiSaver Scheme, you have access to professional expert advice that your bank may not offer. Your AMP adviser is there to help you choose the right fund for your age and risk profile and to help you to make the most of your savings.”
