Monday, July 25, 2011

KiwiSaver and Retirement Funds in their Sights

The New Zealand Government has a Bill prepared which, amongst other things, could enable it to ‘confiscate’ your retirement assets.

Your Kiwisaver account may be mandated to purchase long term bonds through the LGFA or Local Government Funding Agency. This fund is being created under the pretense of ‘helping’ your country by investing your savings in infrastructure and other local Government funding requirements.

“The plan is for the LGFA to issue bonds to both institutional (professional) and "ma and pa" retail investors and on-lend the money raised to participating councils to help fund their infrastructure and other capital investment costs. The idea is to achieve savings through scale and through a strong credit rating at or near AAA.” (

The hope is for Kiwis to keep ownership of assets already earmarked for sale in order to pay off past debt. The pitch but the politicians is the “funding agency will give communities a real stake in local authorities again.”

And they expect us to fall for that line.

New Zealanders, and Kiwisaver Fund Managers, will be encouraged to put their retirement savings into these bonds. In fact, portions of Kiwisaver may even be mandated to do this. A recent debate in parliament on this issue said as much. The legislation even goes so far to ensure that these funds are NOT gauranteed by the Government. Yes, they will not be Too Big Too Fail; but fail they probably will.

Auckland alone will need to borrow $600 million in the next 6 years. Government debt and now local government debt is growing enormously and exponentially. The New Zealand Treasury forecasts that local government borrowings will almost double within the next five years – from $6 billion to around $10 billion. Politicians are looking at more ways to tax and grab than ever to support their drunken debt orgies.

An your Kiwisaver retirement funds are right in their sights to provide a good portion of the capital to buy these bonds.

You may think this is a crazy proposition? After all, the idea of our the Government taking control of 'your' retirement fund would cause you to riot on the streets, would it not? But if memory serves, not rioting, but calm nods of approval greeted the Government when, in the early 1980s, it used the then Super Fund to pay for general Government spending. You see, it is all in the spin.

Jobs, patriotism, safe investments, or your children's future. Whatever the spin required it will be used. Perhaps even denigrating and financially punishing the 'gold bugs' for sending their cash off-shore and not 'helping' their country grow'.

There is risk to every investment. Even with precious metals of course. Maybe the Government of the day, in desperation, could enact draconian laws to halt or discourage funds flowing into this sector. It has happened before in the confiscation of gold in the USA in 1933.

Sure, buying gold, silver and related mining shares etc, is not as easy as the 'pay and forget' retirement funds out there. One has to be more proactive in studying the economy and markets in general to try and get the best value.

But it is your hard earned cash on the line and there can be no doubt it is at risk in the current envirnonment. It is losing value with inflation and it is locked up in funds that you cannot get at.

Now the Government, on their White Horses, are riding into Dodge offering you a brighter future - once they get their hands on your money - again.

Debt has spiralled out of control and Governments look to short term answers for their own political reasons. When they sniff easy cash, look out.

Gold in New Zealand dollars: $1872.08 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $46.87 per oz
Previous all time high: $59.19
per oz

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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