KiwiSaver for Kids?


Question

I am very interested in joining my two young girls into Kiwi Saver but am having trouble finding information, that's not biased towards one particular provider. It is just general information I require, such as any pitfalls, things to watch for, advantages, any commitments etc. Is it even a good idea to enroll young children? Any info greatly appreciated.

replies:

Thank you for your question, Kiwisaver is a very popular subject and we do get asked many questions. 
Let's look at the positives of Kiwisaver for Children (bearing in mind the below comments are based on the current Kiwisaver rules)
It is the start of a long term savings habit, that will stick with them from their first part-time position.
Isn't the best kind of positive habit one you don't even consciously know you're doing?  We have signed our children into KiwiSaver because we envisage that they will put either (under the current rules) 2% or 4% of their first pay slips into KiwiSaver and continue doing this right through their teens and early 20's and really get a head start financially and they won't even realise that they have a great positive savings habit.
3) If your child decides that they do not want to contribute when they start working, they can take a contribution holiday indefinitely.

For children there aren't any more complications other than the need for an IRD number. You can download the form to get apply to get one here
http://www.ird.govt.nz/forms-guides/number/forms-500-599/ir595-form-individualirdapp.html

So what are the negatives;
4) You may pay a small monthly account fee to keep the account open with whomever you choose to start a Kiwisaver account with.
5) Your child whilst a minor is not entitled to tax credit benefits that adults are.

Apart from that, I can't think of any major negatives of joining a child.  To the future, our personal opinion on what will happen to KiwiSaver is purely based on the current ageing population trend we have in New Zealand. The 'baby boomers' are retiring and they are retiring faster and in greater volume, than there are young people entering the work force and this causes a big government revenue problem.

In summary we would not be surprised if over the next decade KiwiSaver to some degree becomes compulsory for all working people. If compulsion does happen your child will have a little head start with their account.

Good luck,
Alden & Dean

Family Financial Advisors 
www.theinsuranceprofessionals.co.nz

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