Wednesday, May 11, 2011

KiwiSaver Redefining Savings


Gold
in New Zealand dollars: $1908.03 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $48.40 per oz
Previous all time high: $48.58
per oz

Today, in New Zealand, our Government announces some major spending cuts in their budget next week.

The NZ Dollar hovers in uneasy anticipation.

However, the news is all about the KiwiSaver scheme. For you non-kiwis, this is a voluntary (perhaps for not much longer) savings scheme. The official website says:

"KiwiSaver is a savings initiative to help set you up for your retirement. Most members will build up their savings through regular contributions from their pay."

Our Government gives a number of incentives to savers. A one time $1000 and a $20 per week tax refund. The Saver puts in 2% of their income and the Employer matches that.

I have been saying, since KiwiSavers inception, that the scheme is flawed in many ways. Anyway, we decided to take control of our own finances and opt out. Glad we did.

One of the flaws was the level of Government involvement to get people to join. Most NZers did (1.7 million) and most said loudly that it was a 'no-brainer' (inferring; unwittingly, that my brain was non-existent...Oh well).

Why the mistrust of Government involvement you say? Why not. In the 1980s our leaders stole the then superannuation fund and used it in the general fund. They were broke. But the Government is broke now, you say. Correct, and it' is 'Back to the Past'.

In fact, the Government is borrowing to put money into this savings scheme. Now how can that be classed as savings in the first place? Hmm, borrowing to save. Sounds like a recipe for disaster. Kind of redefines the meaning of savings? Remember, this debt comes from future production that may not occur. But it does have to be repaid.

But at least the Government recognizes this now. The announcement today is likely to cancel most of the Government involvement in the scheme. The carrots that induced people to join will be gone. But people are locked into the scheme now, with no help and with the prospect of their savings disappearing because of economic conditions.

You see, these schemes have been designed solely to remove your money from you. Sold as a way of protecting your income for retirement years. It's a money spinner for Banks and Fund Managers, but for you, the jury is still out.
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Articles of interest:


Key: We cannot afford KiwiSaver

See article here
NZ Herald


KiwiSaver changes won't break promises - Key

See article here
The National Business Review
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The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
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