Welcome Daniel Callaghan Medical Assurance Society

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Welcome!Daniel CallaghanMedical Assurance
Society
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KiwiSaver is this you

• Were here to take the confusion out of KiwiSaver
• Find out
• Whats in it for you
• How to get the most from it
• What you need to do
• What Medical Assurance is doing
• Time for QA

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Here are all the great benefits!

• Compulsoryemployer contributions

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Lets make KiwiSaver real case study 1

• Each saves 10 per week for 5 years
• Son 10 years
• Daughter (student) 19 years
• Mum (not working) 40 years
• Grandfather 60 retired

Kickstart Fee subsidy Interest
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Lets make KiwiSaver real case study 2

• Salary 50,000 p.a.
• 4 contribution(2,000 p.a.)
• Save for10 years

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HowKiwiSaver works
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IRD at the centre of the KiwiSaver world
Employees (PAYE) 4 or 8
Employees wanting to pay other than4 or 8
All other individuals workers
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Lots of KiwiSaver providers

• All private companies approved by the Government
• Buzzwords Approved / preferred / default
  providers
• Individual has absolute choice can change
  provider at any time

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KiwiSaver a superannuation scheme
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KiwiSaver getting in

• Eligibility NZ Citizen OR eligible to be in NZ
  indefinitely
• Normally resident in NZ
• 2 ways in
• Automatic enrolment new employees aged 18-65
• Includes those new to the workforce as well as
  those changing jobs
• Voluntary enrolment everybody else!
• You may opt in at any time

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KiwiSaver getting out

• 5 years (if you join after age 60)
• Age of eligibility for NZ super(currently age
  65)
• Financial hardship
• Permanent emigration
• Payment towards a first home(terms conditions
  apply)

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Contributions for salary/wage earner

• Salary/wage earners contributing via their
  employer
• Two choices calculated as 4 or 8 of gross
  salary
• Contribution comes out of your take-home pay
• Can take a contributions holiday after 12 months

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How it works for a new employee

• Employees aged 18-65
• New to the workforce changing jobs

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Maximise tax-free contributions

• Employer contributions are tax-free
• Must be matched by you add to either 4 or 8

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Those not workingage 18 64
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There are great benefits!

• From day 1

From age 18 to withdrawal age
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Contributions for non salary/wage earners

• Once you opt-in you cant opt out
• Open KiwiSaver account direct with KiwiSaver
  provider
• You choose how much how often
• Depends on minimum contribution from KiwiSaver
  provider

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How to get started maximise benefit

• Contributions
• Aim for 20 per week to maximise benefit
• Government will match -for- up to 20 per week
• Select a KiwiSaver provider
• Beware minimum contributions
• Medical Assurance has no minimum contributions
• Open an account direct with a KiwiSaver provider

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Self-employedContractor
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There are great benefits!
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Use a company to save tax!

• Take advantage of the tax-free employer
  contributions
• Get your company to pay you a salary/wage bonus
  Government will subsidise this cost up to 20 per
  week!
• Example company pays you 100,000 salary

Employer (your company) Pays you a 4 subsidy
Employee (you) Contribute 4 as well
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First home benefits
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2 great benefits for first home buyers!

• Full withdrawal from your KiwiSaver account
• Government subsidy up to 5,000

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Benefit 1 withdrawal to buy 1st home

• Been in KiwiSaver for 3 years
• You can buy what where you like as long as
• The land is for your own principal place of
  residence
• You have never owned an estate in land before

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Benefit 2 1st home subsidy

• 1,000 per year up to a maximum 5,000
• Available after 3 years
• Maximum household income
• 100,000 p.a. for 1 or 2 KiwiSavers
• 140,000 p.a. for 3 KiwiSavers
• Capped house value lower-quartile priced home
• 400,000 for North Shore City, Auckland City
  Queenstown Lakes District
• 300,000 for the rest of New Zealand
• Will be finalised in 2010 (when first subsidies
  available)

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Double the benefits with two KiwiSavers
40 annualfee subsidy
40 annualfee subsidy
Employer contributions
Employer contributions
5,000 subsidy
5,000 subsidy
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Medical AssuranceKiwiSaver Plan
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MAS KiwiSaver Plan simple open to all!

• Really simple!
• Range of investment options
• Simple fee structure
• Proven background
• Who can join?
• All Society Members
• Your family, employees associates no
  restriction on entry

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MAS KiwiSaver Plan
Global Equities
Aggressive
Balanced
Defensive
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You decide how your money is invested
10
100
50
40
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MAS KiwiSaver Plan competitive fees

• 1 management fee this is paid before you see
  your returns

Subject to the KiwiSaver Act, fees can change
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Medical Assurance a great choice!

• Offering superannuation since 1970s since 1993
  in current form
• About 145m Member funds under management
• Use professional investment manager their
  profile
• In NZ
• NZ9 billion funds under management
• 2006 Morningstar Fund Manager of the Year (12th
  year out of 15)
• 2006 FundSource Fund Manager of the Year
• Globally
• NZ1 trillion funds under management
• 60 million clients 152,000 employees
• We can change them at any time and have done so
  before

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Enjoy trustee protection diversification

• Protected trustees to watch over how your money
  is invested
• Diversified across thousands of assets
• Government cant touch it! Its your money

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In summary

• KiwiSaver great opportunity to prepare for
  retirement with direct Government help
• Multiple cash benefits and tax savings!
• 100 voluntary only new employees will be
  automatically enrolled
• Not suitable for everyone (ie cant afford 4
  gross salary from after-tax pay)
• Maximise the value of your retirement savings
• Keep what youve got where it is
• Invest some of your future contributions to
  maximise KiwiSaver

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Employers
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Employers whats in it for you?

• Work to setup and then administer for your
  practice or business
• A chance to think about whether you help your
  staff with their contributions either by
• The practice or business subsidising the
  superannuation (over above the compulsory
  amount)
• Offering salary sacrifice until the compulsory
  subsidy is in place
• The tax benefit
• The tax-free benefit is enjoyed by the employee
  you still pay the same amount out
• Is worth more than a simple pay rise

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Who does what?
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Who does what?
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Who does what?
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What you must do

• Understand your KiwiSaver obligations
• Make payroll changes there are two additional
  employer deductions for KiwiSaver
• Decide whether to makeadditional employer
  contributions above the minimums
• Decide whether to select apreferred KiwiSaver
  provider

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wait for it

• On the first day an employee will ask you the
  dreaded question who should I open my KiwiSaver
  account with? What do you do?
• Rule 1 never give financial advice
• Rule 2 when in doubt refer rule 1
• The good news the legislation does allow you to
  select a preferred provider. Thats where
  Medical Assurance (MAS) can help you out
• By making MAS your preferred provider
• Send investment queries our way
• We can educate your employees about KiwiSaver
• We can get your employees to get their KiwiSaver
  account up andrunning and figure out the best
  way to invest
• You have just one organisation to deal with

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What you need to do
1 New employee starts at your practice (or
existing employee chooses to join)
2 You provide an IRD info pack within 7 days if
they meet the automatic enrolment criteria
3 New employee provides IRD number, name address
4 You start contributions from employees first
pay. You can also contribute
6 If the employee opts-out, you can refund any
KiwiSaver contributions that have not been sent
to IRD
5 New employee can opt out by giving you or IRD
anopt-out form
8 IRD passes contributions to employees
KiwiSaver provider
9 After 12 months, employees can ask you to stop
contributions with a contribution holiday letter
7 You use the Employer Monthly Schedule to pay
contributions to IRD. You send employee
details/opt-out forms at the same time
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What can you do for your employees?

• Option 1 minimum obligations
• Staff member pays the whole 4 or 8 themselves
  through PAYE
• Remember from 1st Apr 2008 you must contribute
  1
• For you no cost (other than admin)
• For employees will have to meet all contribution
  costs themselves from their take-home pay

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1 pay rise p.a. from 2008

• From 1 April 2008 1 contribution
• From 1 April 2009 2 contribution
• From 1 April 2010 3 contribution
• From 1 April 2011 4 contribution
• Government will provide employers a tax credit
• Up to 20 per week per employee
• Paid via PAYE system credit back against PAYE
  due
• Factor into your wage negotiations

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Govt will subsidise your subsidy!

• Example 3 employees (annual cost)

Year 1 1
Year 2 2
Year 3 3
Year 4 4
Cost 300 Credit 300 ?
Cost 600 Credit 600 ?
Cost 900 Credit 900 ?
Cost 1,200 Credit 1,042 Short 158
Employee30k
Cost 500 Credit 500 ?
Cost 1,000 Credit 1,000 ?
Cost 1,500 Credit 1,042 Short 458
Cost 2,000 Credit 1,042 Short 958
Employee50k
Cost 700 Credit 700 ?
Cost 1,400 Credit 1,042 Short 358
Cost 2,100 Credit 1,042 Short 1,058
Cost 2,800 Credit 1,042 Short 1,758
Employee70k
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What can you do for your employees?

• Option 2 provide a superannuation subsidy
• Effectively a pay rise for your staff
• Employer contributions (up to a maximum of 4)
  into a KiwiSaver scheme are tax-free as long as
  the employee matches the contribution
• Key decision start now or wait for compulsory
  contributions
• For you
• An extra cost but also a positive benefit
  potential retention tool
• For employees
• Half of their KiwiSaver contribution is at no
  cost to them plus they get your contribution
  tax-free

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What can you do for your employees?

• Option 3 offer salary sacrifice
• Allow staff to sacrifice and benefit from the
  tax-free employer contributions
• For you
• No cost, but a positive benefit potential
  retention tool
• Great holding pattern whilst the compulsory
  contributions increase
• For employees
• Pay the full amount themselves
• Half the amount contributed is tax-free

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There is info available to you
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There is info available to you
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We can help

• Well do the talking about KiwiSaver for you
• Superannuation subsidy salary sacrifice
• Team based in Hamilton
• Phone [phone] MAS (627) or
• Email kiwisaver_at_medicals.co.nz

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• Any questions?!

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Q A the time is yours
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Mortgage diversion
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Help to pay off your mortgage
100 employer
100 your contribution
OR
EITHER
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Works just like a bank account
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Key message 2 what should you save?

• Get sorted first
• Under 18s
• Dont have to contribute but.
• 5 - 10 per week to keep the account ticking
  over
• Age 18 not receiving employer contributions or
  not working
• Dont have to contribute but.
• 20 per week maximises the Government -for-
  subsidy
• Those receiving an employer subsidy or with
  access to salary sacrifice
• The amount needed to maximise the tax-free
  employer contributions

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ChildrenGrandchildrenBirth to17 years
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There are great benefits!

• From day 1 working or not

• Fee subsidy annual

• Kickstart on opening

• 1st home benefit clockstarts ticking early

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Get the whole family involved!

• Not just about retirement start a savings habit
• More focus for young children on first home
  benefits
• Get the whole family to contribute whatever
  suits them

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Lets make it real Mary age 5

• Family contribute 5 per week (total) to age 18

Family KiwiSaver subsidies interest
Family KiwiSaver subsidies
Mum dad savings account interest
4,999
Familyonly
3,380
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How to make it happen

• Get your children an IRD tax number
• Contributions work out who, how much how
  often
• Select a KiwiSaver provider
• Beware minimum contributions
• Medical Assurance has no minimum contributions
• Open your account direct with a KiwiSaver
  provider
• Until 1st Oct 2007 all payments will need to go
  via IRD

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Key message 3 get the best of both worlds
Current retirement

• Tax-free employer cont
• 1,000 kickstart
• 1,040 p.a. tax credit
• 40 fee subsidy
• Lock in to age 65

Divide future
Currentretirement plan

• Earlier access
• KiwiSaver lockedaway to 65

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Key message 1 KiwiSaver isnt for all!

• Can afford either 4 or 8 of gross salary from
  your after-tax pay
• Dont need the money soon
• Thinking first home!
• Want the extra benefits!
• Children non-worker

• Cant afford either 4 or 8 of gross salary
• Have high interest debt to get rid of
• Less than 5 years from retirement and want all
  your money at that time
• Less than 5 years from withdrawal age for your
  retirement plan and want all your money at that
  time

X
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Salary sacrifice
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Another way to maximise tax-free!

• A unique legal way of taking advantage of the
  KiwiSaver tax savings
• Take advantage of KiwiSaver tax-free benefit when
  your employer is not wanting to provide a subsidy
• On 1 April 2000
• Top personal income tax rate went up to 39
• Superannuation tax (SSCWT) rate remained
  unchanged at 33.
• The Government has kept this gap of six cents in
  the dollar

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How it works

• You agree to sacrifice a portion of your salary
• Your employer pays this sacrificed amount as an
  employer contribution hence it becomes tax-free
  (as long as you match it)
• As the compulsory employer contribution goes up,
  you can reduce what you sacrifice

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An example Jane Smith

• Annual gross salary of 100,000
• She sacrifices 4 and pays another 4

Standardretirement plan
Employee 4,000 Sacrifice 2,680 (tax
_at_33) Total 6,680
Employee 4,000 Sacrifice 4,000 tax
free Total 8,000
19.8 increase in thevalue of contributions
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Be wary of salary sacrifice

• Salary sacrifice can affect for better or worse
  other benefits
• Personal insurances calculated on salary (such as
  income protection insurance),
• Liable parent payments
• Student loan repayment obligations

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Members with DHB subsidised superannuation
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Take advantage of the 6 subsidy!

• DHB medical dental staff eligible for 6 DHB
  subsidy
• Putting everything into KiwiSaver is not a wise
  move
• Increase the value of your contributions by
  splitting your contributions!
• If youre not taking advantage of subsidised
  super, get going ASAP (dont wait for KiwiSaver!)

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Increase the value of your contributions by 24!
Current retirement

• 1,000 kickstart
• Tax-free employer cont
• 1,040 p.a. tax credit
• 40 fee subsidy

Divide future

• Either 2 or 4 of subsidy
• You match with 2 or 4

• Earlier access
• KiwiSaver lockedaway to 65

Existing plan

• Balance of the subsidy
• Balance ofyour contributions

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Subsidies KiwiSaver great combination!

• Lets assume an annual gross salary of 100,000

CURRENT
FUTURE
So the two tax benefits increase the value of
your annual contributions by 23.6 p.a.
3,340 Standard retirement plan
1,040 new tax credit
12,380 Total retirement savings each year
10,020 Total retirement savings each year