How much will your KiwiSaver pot be worth?

From 31 March this year, KiwiSaver scheme providers are required to include retirement savings and retirement income projections on their members’ Annual Statements. The aim is to help KiwiSaver members understand how much they could have in their KiwiSaver account when they turn 65 (the current age of retirement in New Zealand), and the weekly income in retirement this balance could provide.

It’s hard making decisions, years in advance, about factors that could impact how much money KiwiSaver members will have in retirement – without a way of being able to see what the outcome of those decisions might be. That’s why we believe including retirement savings and income projections is a good thing.

KiwiSaver members will see whether they’re on track for the kind of retirement they want, or whether they need to make changes to their savings habits now.

What should KiwiSaver members expect to see?

KiwiSaver members will see two numbers on their Annual Statement. The first is their expected KiwiSaver account balance at age 65. The second turns that balance into a weekly income – and assumes they leave their money in their KiwiSaver account and draw regularly from it.

There’ll be other information too, but the key statement will look like this:

Of course, the numbers they’ll see will be specific to their own KiwiSaver account! It’s also worth bearing in mind the figures don’t consider any other investments they have, or any NZ Super payments they may be entitled to.

They are estimates

We would need a crystal ball to know exactly what the KiwiSaver members account balances will be at age 65. So, think of these projections as a guide to what might happen. The important thing they do is help KiwiSaver members think about whether they might need to do more to have the retirement income they might need.

Who’s going to receive them?

Most KiwiSaver members will receive savings and income projections, but not everyone.

For example, if you’re aged 18 to 64 and have been a member of the BNZ KiwiSaver Scheme for the whole year (from 1 April 2019 to 31 March 2020), you’ll find the projections on the back of your Annual Statement.

But if you’re under 18 or over 65, or haven’t been a member the BNZ KiwiSaver Scheme for the whole year, you won’t receive them. Instead, we’ll include information about some of the choices you can make today to be better prepared for retirement.

How will the savings and income projections be calculated?

The projections use a standard formula and set of assumptions. All KiwiSaver providers use them.

If you’re a BNZ KiwiSaver Scheme member, the figures on your Annual Statement will be estimates, and based largely on the contributions you have made during the last year, your current choice of investment fund, and any money you may have received from your employer or the Government during this time. The numbers are simply there to guide you and help you recognise whether you need to make any changes.

If you’ve joined or transferred to the BNZ KiwiSaver Scheme during this year, we won’t have all the information we need to calculate your future account balance, and that’s why you won’t be receiving savings and income projections this year.

Tools available to help with KiwiSaver planning

Each KiwiSaver provider may have helpful tools to help with KiwiSaver planning. At BNZ, we have an online tool to help you see how your KiwiSaver balance might grow between now and when you plan to retire. In fact, you can use it now if you don’t want to wait for your Annual Statement – or if you think you won’t be getting retirement savings and income projections this year. Check it out here. Just bear in mind we’re currently in the process of updating our calculators to reflect our view that the future returns from investment markets may be lower than what we’ve experienced more recently. These changes should take effect later this month.

Pop in your basic KiwiSaver account information – such as your current age, income, account balance, contributions rate, and fund choice – and our tool will work out how much you could have by age 65. What’s more, you can see what impact some simple changes could have on your future account balance – such as changing your fund choice or upping your contributions rate.

Our online tool also helps if you’re saving for a first home and can include NZ Super payments you may be entitled to in order to give you a more rounded picture of your retirement.

When can BNZ KiwiSaver Scheme members expect to receive their Annual Statement?

We expect Annual Statements and Tax Certificates to be available to BNZ KiwiSaver members in May this year, other KiwiSaver providers may be different. If we have your email address, we’ll let you know when they’re available to view online. If we don’t, we’ll send you a copy of these in the post.

The information in this article is provided for general purposes only, and is a summary based on selective information which may not be complete for your purpose.  To the extent that any information or recommendations in this article constitute financial advice, they do not take into account your financial situation or goals and is not intended as personalised financial advice. While BNZ has made every effort to ensure that the information provided is accurate, you should not rely on this information to make any financial decision without first having sought advice specific to your circumstances from an authorised financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.

BNZ Investment Services Limited, a wholly owned subsidiary of Bank of New Zealand (‘BNZ’), is the issuer and manager of the BNZ KiwiSaver Scheme. Download a copy of the BNZ KiwiSaver Scheme Product Disclosure Statement PDF, or pick up a copy from a BNZ branch. Investments made in the BNZ KiwiSaver Scheme do not represent deposits or other liabilities of BNZ or any other member of the National Australia Bank Limited group, and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of BNZ or any other member of the National Australia Bank Limited group, the Supervisor, and any other director of any of them, the Crown or any other person guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or the repayment of capital.