Credit Union KiwiSaver scheme - 2011 November
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Credit Union KiwiSaver scheme
November 2011
Mercer (N.Z) Limited is the provider of the Credit Union KiwiSaver scheme.Important information
The information in this section is required under the Securities Act 1978.
Investment decisions are very important. They often have long-term
consequences. Read all documents carefully. Ask questions. Seek advice
before committing yourself.
Choosing an investment
When deciding whether to invest, carefully consider the answers to the following
questions that can be found on the pages noted below:
What sort of investment is this? 4
Who is involved in providing it for me? 5
How much do I pay? 7
What are the charges? 10
What returns will I get? 11
What are my risks? 20
Can the investment be altered? 21
How do I cash in my investment? 22
Who do I contact with enquiries about my investment? 23
Is there anyone to whom I can complain if I have problems with
the investment? 23
What other information can I obtain about this investment? 24
In addition to the information in this document, important information can
be found in the current registered Prospectus for the investment. You are
entitled to a copy of that Prospectus on request.
This Investment Statement has been prepared for the purposes of the Securities Act 1978 in connection
with the offer of membership of the Credit Union KiwiSaver scheme. This Investment Statement provides
general information about the Credit Union KiwiSaver scheme. If there is any discrepancy between this
Investment Statement and the Governing Rules of the Credit Union KiwiSaver scheme, the Governing
Rules will be the final authority.
1 November 2011
ii Issued by Mercer Investment Nominees (NZ) Limited and Elliott Burcher (“Independent trustee”) as
trustees of the Credit Union KiwiSaver scheme.The Financial Markets Authority regulates conduct in
financial markets
The Financial Markets Authority regulates conduct in New Zealand’s financial
markets. The Financial Markets Authority’s main objective is to promote and
facilitate the development of fair, efficient, and transparent financial markets.
For more information about investing, go to http://www.fma.govt.nz.
Financial advisers can help you make investment decisions
Using a financial adviser cannot prevent you from losing money, but he or she
should be able to help you make better investment decisions.
Financial advisers are regulated by the Financial Markets Authority to varying
levels, depending on the type of adviser and the nature of the services they
provide. Some financial advisers are only allowed to provide advice on a limited
range of products.
When seeking or receiving financial advice, you should check:
■■ the type of adviser you are dealing with;
■■ the services the adviser can provide you with;
■■ the products the adviser can advise you on.
A financial adviser who provides you with personalised financial adviser services
may be required to give you a disclosure statement covering these and other
matters. You should ask your adviser about how he or she is paid and any
conflicts of interest he or she may have.
Financial advisers must have a complaints process in place and they, or the
financial services provider they work for, must belong to a dispute resolution
Scheme if they provide services to retail clients. So if there is a dispute over an
investment, you can ask someone independent to resolve it.
Most financial advisers, or the financial services provider they work for, must
also be registered on the financial service providers register. You can search for
information about registered financial service providers at http://www.fspr.govt.nz.
You can also complain to the Financial Markets Authority if you have concerns
about the behaviour of a financial adviser.
1The Credit Union KiwiSaver scheme
Welcome to the Credit Union KiwiSaver scheme. This Scheme has been designed to help you save for
retirement and includes a range of benefits, flexible features and quality member services.
What are the benefits of the Credit Union KiwiSaver scheme?
Members of the Credit Union KiwiSaver scheme benefit from the Government’s If you are a member of the Credit
KiwiSaver incentives. These include: Union KiwiSaver scheme, you can
also benefit from:
■■ a $1,000 kick-start contribution when you first start your KiwiSaver account
(unless you have already received the KiwiSaver kick-start contribution). ■■ Ease of access to your account
■■ member tax credit contributions of 50 cents for each $1 of your own information – 24 hours / 7 day
contributions up to a maximum of $521.43 a year. online access. You can view your
balance, transactions, unit prices,
Employer contributions*: If you contribute to KiwiSaver, your employer is update your contact details and
generally required to contribute on your behalf at a rate of 2%** of your gross even change your investment
salary or wages. strategy.
First home buyer assistance: If you’re buying your first home, or a subsequent ■■ Answers to your enquiries –
home if you are in the same financial position as a first home buyer, after three The professional Helpline team
or more years of KiwiSaver membership you may qualify for a home loan deposit has extensive superannuation
subsidy and be able to make a one-off withdrawal from your savings. experience and a strong customer
focus.
■■ Investment capability – Mercer
(N.Z.) Limited invests in research
of fund managers, financial
markets and investment strategies.
By leveraging Mercer’s global
scale, the Scheme can provide
leading edge risk mitigation and
the latest investment strategies -
cost-effectively. Please see
‘What is the investment approach
for this Scheme?’ on page 16 for
more information.
*Different rules may apply if your employer is contributing to another superannuation Scheme on your behalf. Contact your
employer for details.
**The Government has introduced legislation to provide that as from 1 April 2013 the minimum employer contribution rate
will increase from 2% to 3% of an employee’s gross salary or wages.
2Who is eligible to join the Credit Union KiwiSaver scheme?
If you have started a new job, you You may join the Credit Union KiwiSaver scheme if you are living in New Zealand
may have been offered membership and meet the eligibility rules for KiwiSaver.
of another KiwiSaver scheme. You
KiwiSaver is open to all New Zealand citizens and people entitled to live here
can still choose to join this Scheme,
permanently who are under the age of eligibility for New Zealand Superannuation
however, you can only be in one
(currently 65). This includes workers on a part-time or temporary contract,
KiwiSaver scheme at a time. If
self-employed people and beneficiaries.
you are already a member of a
superannuation scheme, you may
Staying in touch…
consider enrolling in this Scheme and
transferring your existing scheme’s As a member of the Credit Union KiwiSaver scheme, you’ll receive:
benefits across.
■■ an annual report to bring you up to speed on investment performance and
As a potential member of the Credit what’s happened in the Credit Union KiwiSaver scheme over the year
Union KiwiSaver scheme you need to ■■ an annual member statement showing your transactions, including
make some decisions about saving for contributions and other items paid into your Account
your retirement. Make sure you read
■■ online access to your savings records, plus information and interactive
all the information in this investment
planning tools.
statement, then, if you wish to join,
complete the application form and Where can I get help with my decisions?
return it to Mercer.
To help decide which investment option(s) might be most suitable for you, see the
We recommend that you obtain ‘Returns and risks’ section starting on page 11.
professional financial advice before
making any decisions about your You could also:
KiwiSaver investment.
Visit our website www.cukiwisaver.co.nz for further information
Call us 0800 CU KIWI (0800 28 5494)
(toll free in New Zealand)
9am–7pm, Monday – Friday (except for public holidays)
Write to us Credit Union KiwiSaver scheme
C/- Mercer
PO Box 1849
Wellington 6140
Alternatively, you could get advice from an authorised financial adviser.
3Getting to know the Credit Union KiwiSaver scheme
In this section, you’ll find out:
■ What sort of investment is this?
■ Who is involved in providing it for me?
■ What is the nature of the Scheme?
■ How long has the Scheme been operating?
■ Information about responsible investment
What sort of investment is this?
The Credit Union KiwiSaver scheme (the “Scheme”) is a registered KiwiSaver
scheme under the KiwiSaver Act 2006 and has been designed to help you save
for retirement.
The New Zealand Association of Credit Unions (“NZACU”) has established this
Scheme to offer an attractive KiwiSaver option for the benefit of Credit Union
members.
The trustees invest your Member’s Account on your behalf, in your choice of the
following current investment options:
■■ Kiwi Conservative
■■ KiwiPlus Balanced
■■ Global Growth
If you do not choose an option, you will be allocated to the KiwiPlus Balanced
option (this is also called the Scheme’s “default” investment option).
At any point in time your savings are equal to the balance in your Member’s
Account. This is made up of:
■■ the contributions and transfers made by you and/ or your employer, and/or
anyone else on your behalf;
■■ the contributions and member tax credits from the Government;
■■ investment returns from your chosen investment options (which may be
positive or negative);
■■ less any applicable fees, charges, taxes and any money transferred or paid out.
Generally, you may withdraw some or all of the balance of your Member’s Account
after being a member of a KiwiSaver scheme or Complying Superannuation
Fund for 5 years, or attaining the New Zealand Superannuation qualification age
(currently 65), whichever is the later. Membership of the Scheme and any previous
KiwiSaver schemes can be combined to meet the 5 year total. A Complying
Superannuation Fund is an existing superannuation Scheme that has been
amended to meet certain KiwiSaver rules.
See the section ‘Contributions, benefits and fees’ on page 7 for more information.
4Who is involved in providing Who is the administration manager? Who is the Promoter?
it for me? Mercer (N.Z.) Limited (“Mercer”). The The promoter is the New Zealand
administration Manager’s address Association of Credit Unions
What is the Scheme’s name? (“NZACU”). The contact address
as at the date of this Investment
The full name of the Scheme is the Statement is: of the NZACU as at the date of the
“Credit Union KiwiSaver scheme”. Investment Statement:
The Administration Manager
Credit Union KiwiSaver scheme New Zealand Association of Credit
Who are the trustees?
Mercer (N.Z.) Limited Unions
Mercer Investment Nominees (NZ) 113-119 The Terrace Level 3, 25 Teed Street,
Limited (“MINL(NZ)”) PO Box 2897 Newmarket, Auckland,
The trustees’ address as at the date Wellington 6140. PO BOX 9582,
of this Investment Statement: Newmarket, Auckland 1149
Level 18, 151 Queen Street The administration manager’s address
PO Box 105591 may change from time to time. Details The trustees of the NZACU (who are
Auckland 1143; of the administration manager’s also promoters) are:
current address can be obtained by
and Bruce Walton ROSS
contacting our Helpline on
Malcolm John BLAIR
Elliott Burcher (“Independent 0800 CU KIWI (0800 28 5494).
Trustee”) The NZACU trustees may change
Mercer also has an office at:
New Zealand Association of Credit from time to time. They can be
Unions Level 18, 151 Queen Street contacted at the address above.
Level 3, 25 Teed Street, PO Box 105591
Newmarket, Auckland, Auckland City 1143.
PO BOX 9582,
Mercer is also the Scheme provider
Newmarket, Auckland 1149
under the KiwiSaver Act 2006.
The trustee’s address may change
from time to time. The current address
may be obtained by contacting our
Helpline on 0800 CU KIWI
(0800 28 5494).
The Independent Trustee and the
directors of MINL(NZ) may change
from time to time.
The responsibilities of the trustees are:
■■ to ensure members’ rights and
interests are protected
■■ the investment of assets
■■ the general operation of the
Credit Union KiwiSaver scheme in
accordance with the relevant trust
deed and legislation.
From 1 October 2012 the trustees
are required to be licensed under the
Securities Trustees and Statutory
Supervisors Act 2011.
5What is the nature of the About Mercer Information about
Scheme? Mercer has been running responsible investment
superannuation schemes in New
The Scheme is a registered KiwiSaver Legislation that took effect from
Zealand for over 35 years and
scheme under the KiwiSaver Act 2006 1 April 2008 requires the Scheme’s
currently manages some of the
and is governed by a trust deed. investment statement to state
largest workplace retirement savings
whether the Scheme’s investment
How long has the Scheme schemes in the country. With a
policy takes into account responsible
team of over 100 employees in
been operating? New Zealand, Mercer has the local
investment. Responsible investment
is an umbrella term to describe an
The Scheme was established by a expertise to fully cater for all your
investment process which takes
trust deed dated 30 November 2006, retirement savings needs.
environmental, social, ethical, or
and amended by a deed dated 28 governance considerations
As well as a local presence, Mercer
May 2007 to comply with amendments into account.
(N.Z.) Limited is part of a much larger
to the KiwiSaver legislation.
global business. Mercer has over
Responsible investment including
The trust deed contains the governing 18,000 employees in 40 countries
environmental, social, and
rules of the Scheme. focused on providing quality services
governance considerations, is not
to business and consumers alike.
About the NZACU/ Credit Unions taken into account in the investment
Mercer is part of Marsh & McLennan
policies and procedures of this
The Association represents Companies, Inc, which is listed on
Scheme, at the date this investment
21 Member Credit Unions nationwide. both the New York and London
statement was prepared.
It has been the main trade association stock exchanges.
for Credit Unions in New Zealand for If you would like more information
over 50 years. about Mercer, please visit
The 21 Member Credit Unions serve www.mercer.co.nz
over 175,000 New Zealanders
nationwide with an affordable range
of banking and insurance products
to help them gain greater financial
independence. Credit Unions
are registered under the Friendly
Societies and Credit Unions Act
1982 and are not registered banks.
They are locally owned by their
members, not-for-profit and are a
trusted alternative to banks.
Credit Unions encourage savings,
thrift and education to enhance the
social and economic well-being of their
members. Members save and borrow
from each other at reasonable rates of
interest and with a sensible approach
to fees and other charges. Anyone can
join their local Credit Union.
6Contributions, benefits and fees
In this section, you’ll find out:
■ How much do I pay?
■ What do I contribute?
■ Employer contributions
■ What happens to my contributions?
■ What are the charges?
How much do I pay? Employer contributions
Your retirement savings build through contributions to your “KiwiSaver Member’s Subject to certain exemptions,
Account.” This section explains how the KiwiSaver Member’s Account works. employers need to make compulsory
contributions of a minimum of 2%**
What do I contribute? of gross salary or wages to their
employees’ KiwiSaver scheme or
As this is a KiwiSaver scheme, employees contribute either 2%*, 4% or 8% of complying superannuation fund.
total gross salary or wages, as defined by the KiwiSaver Act (that means your total
salary or wages – including bonuses, commission, extra salary and overtime). Subject to certain conditions, if your
The contribution is calculated as a percentage of before-tax salary, but is deducted employer is already contributing to a
from after tax salary. registered superannuation plan on your
behalf, it may:
The default contribution rate is 2%*. When you join the Scheme, your employer
will calculate your contribution as a percentage of your gross (before-tax) salary ■■ reduce any compulsory
but deduct it from your net (after-tax) salary or wages each pay period. Your contributions it is required to make
contributions are deducted from your pay in the same way as PAYE and forwarded to the Credit Union KiwiSaver
to Inland Revenue. Inland Revenue then sends your contributions to the Credit scheme by an amount not
Union KiwiSaver scheme. exceeding the amount it contributes
to your other plan; or
The following table shows how much would be deducted from your weekly or ■■ reduce its contributions to that plan
fortnightly pay, if you chose either the 2%*, 4% or 8% contribution rate: by the amount it contributes to the
Weekly KiwiSaver contributions Monthly KiwiSaver contributions Credit Union KiwiSaver scheme.
Salary or
wages (p.a) 2%* 4% 8% 2%* 4% 8%
$20,000 $8 $15 $31 $33 $67 $133
$30,000 $12 $23 $46 $50 $100 $200
$40,000 $15 $31 $61 $67 $133 $267
$50,000 $19 $38 $77 $83 $167 $333
$60,000 $23 $46 $92 $100 $200 $400
$70,000 $27 $54 $107 $117 $233 $467
You can switch between contribution rates by contacting your employer and
requesting a “KS 2” form. The new rate will apply to your next pay after your
employer receives your completed form.
If your deductions are made from your salary you cannot change your rate more
frequently than at three monthly intervals without your employer’s agreement.
If you are self employed or not working and wish to make personal contributions,
you can nominate how much you contribute. The minimum contribution to the
Credit Union KiwiSaver scheme in this scenario is $10 per fortnight, or $21.66 per
month. These contributions can be arranged through a regular payment made
directly to the Scheme (by direct debit). Your contributions will be credited to your
KiwiSaver Member’s Account.
* The Government has introduced legislation to provide that as from 1 April 2013 the minimum employee
contribution rate will increase from 2% to 3% of an employee’s gross salary or wages. This will apply to both
existing and new KiwiSaver members. You will be able to contribute at 3%, 4% or 8% of your salary or wages.
** The Government has introduced legislation to provide that as from 1 April 2013 the minimum
employer contributions for eligible employees will increase from 2% to 3% of an employee’s
gross salary or wages. 7Tax on your employer’s be invested on a pro rata basis in the ■■ choosing the “Pay tax” option on
investment option(s) that apply your internet banking service
contributions
to you. ■■ paying over the counter at any
Compulsory employer contributions Westpac bank branch
to your account are tax-free until You can only receive one $1,000
contribution. There will be no ■■ sending a cheque to Inland
31 March 2012. Any employer
additional contribution if you Revenue.
contributions that are not compulsory,
i.e. contributions over 2% of gross transfer from one KiwiSaver
You will need to provide your IRD
salary or wages, or contributions scheme to another.
number to ensure your payment is
paid to those under 18, or over the made to your Member’s Account.
Member tax credit contributions
age at which they can withdraw Please contact the Helpline for
their KiwiSaver savings, are subject The Government will contribute a more information on making
to Employer’s Superannuation member tax credit of 50 cents for additional contributions and lump
Contribution Tax (ESCT). From every dollar you contribute up to a sum contributions. Employer
1 April 2012, all employer total of $521.43 a year. This means contributions must be paid via
contributions will have ESCT for every dollar you contribute (up to Inland Revenue.
deducted from them before they a maximum of $1,042.86 a year) the
are credited to your account. ESCT Government will also contribute Transferring other super to the
is payable by your employer and 50 cents. Credit Union KiwiSaver scheme
deducted at your personal marginal
tax rate. Member tax credits will be contributed If you have retirement savings from
to your account provided you meet the another superannuation scheme you
The explanations regarding tax following criteria: can add this to your Credit Union
contained in this Investment KiwiSaver account.
Statement reflect Mercer’s ■■ you are aged 18 or older and are
understanding of the tax regime in not yet eligible to access your If you are transferring from another
place at the date of the Investment KiwiSaver account; and KiwiSaver scheme the administration
Statement. Tax laws (and their ■■ subject to certain exemptions, manager will arrange the transfer
interpretation) can change, sometimes you have New Zealand as your for you once you’ve completed and
with little or no notice. Mercer will principal place of residence. returned the appropriate form. If
always try to keep you up to date with you are transferring from another
Member tax credits are paid into your
any relevant tax changes. However, superannuation fund you should
KiwiSaver account annually after 30
we recommend you seek your own check with the other superannuation
June. You do not need to apply for
professional advice on tax matters. scheme beforehand and investigate
these as the Scheme will manage this
any charges they may impose before
for you.
What does the Government requesting a transfer.
contribute? How do I make lump sum Note that you may only be a member of
contributions? one KiwiSaver scheme at any one time.
When you join your first KiwiSaver
scheme, the Government will make a You, your employer or any other
$1,000 “kick-start” tax-free person can make additional
contribution to your Member’s contributions and one-off lump sum
Account. This must be paid within payments to the Scheme.
three months of your (or your
employer’s) first contribution to that You can pay lump sums to the Credit
KiwiSaver scheme. The $1,000 will Union KiwiSaver scheme via Inland
Revenue by:
8What happens to my What is a contributions holiday? Parental leave
contributions? You can apply for a contributions If you continue to be paid by
holiday after you have been a member your employer when you are on
Generally, your employer will pay
of a KiwiSaver scheme for 12 months. parental leave, your KiwiSaver
your contributions to Inland Revenue,
contributions will continue to be
which holds them in the Inland A contributions holiday can be for a
deducted from your pay (unless
Revenue KiwiSaver Holding Account. minimum period of three months up to
you request a contributions holiday.)
Information on the contributions in a maximum of five years, during which
this Account can be obtained from time you do not have to contribute to If you are on parental leave and
Inland Revenue. the Scheme. There may be a shorter not being paid by your employer,
period than 3 months if your employer your KiwiSaver deductions will
Inland Revenue keeps the
agrees. stop automatically. However, you
contributions in this interest-bearing
can arrange to keep them going by
account for the first three months If a contributions holiday is granted, it contacting Inland Revenue.
that you contribute to KiwiSaver. will take effect from your next pay day.
At this stage they are passed on to Contributions holidays can be revoked When you return to paid work, your
your KiwiSaver provider, along with and reinstated, and you may apply contributions will continue to be
interest, and the $1,000 tax-free for a new contributions holiday after deducted from your pay as before.
Government contribution. a previous holiday ends. There is no
Out of the workforce
Any contributions after this date are limit to the number of times you can
paid by Inland Revenue directly to take a contributions holiday. If you are contributing to KiwiSaver
your KiwiSaver administrator. and lose your job or are out of the
To do so, complete a Contributions
workforce for any reason, your
You may make voluntary contributions Holiday Request (KS6) form and give
contributions will stop unless you make
directly to Mercer as the Scheme this to your employer. To find out how
arrangements to keep them going.
administrator. to apply for a contributions holiday,
please contact Inland Revenue at:
If you are self employed or not
working, your contributions can be 0800 KIWISAVER (0800 549 472)
made directly to Mercer. fax 0800 447 755
PO Box 2198, Wellington
website www.kiwisaver.govt.nz.
If you suffer or are likely to suffer
financial hardship within the first 12
months of saving, contact Inland
Revenue as you may be eligible for an
early contributions holiday.
Paid leave
If you take a trip overseas or in
New Zealand, but are still paid by
a New Zealand employer, your
KiwiSaver contributions will continue
(unless you request a contributions
holiday). If you take a break from
saving while you’re away you can still
make lump sum payments.
9What are the charges? Notes
1. Indexation: The Scheme
At the date of this Investment Statement, the following fees applied to the membership fees may be reviewed
Scheme: each year based on the movement
in the National Full-Time Adult
Average Weekly Ordinary Time
Administration fee: $3.25 (per member
Earnings Index over the previous
per calendar month)
year.
Investment Management fee**: 2. GST: All fees are exclusive of any
Kiwi Conservative Investment option 0.70% p.a. GST that may apply. Generally
speaking, GST will not apply.
KiwiPlus Balanced Investment option (default) 0.75% p.a.
3. Indemnity: The trustees, and
Global Growth Investment option 0.85% p.a. any directors, officers and
employees of any trustee, are
Member Services fee**: 0.25% p.a.
entitled to be reimbursed for any
Buy/sell spreads, Entry fee, exit fee, The Scheme does not liabilities and expenses incurred in
contribution fee, switching fee: currently charge these fees. running the Scheme.
Trustee fee**: 0.05% per annum 4. Reasonable fees: The KiwiSaver
Act requires that fees charged
Recoverable expenses: The trustees may be by KiwiSaver schemes must be
reimbursed out of the trust reasonable. Investors can apply
in respect of costs, charges, to the Court for an order that any
expenses and outgoings unreasonable fee be annulled or
reasonably and properly reduced. Any such application must
incurred by the trustees be made within one year of the
in connection with the day the fee is imposed or debited.
performance of their duties or Subject to the KiwiSaver Act the
the exercise of their powers Trustees may alter the fees set out
under the trust deed. on this page and introduce new
These fees are shown gross of tax (i.e. before tax). fees from time to time.
** The Investment Management fee, Member Services fee, and Trustee fee are calculated as a percentage 5. The normal costs of investing, such
of the fund assets.
as transaction costs when members
enter and exit an investment option
are deducted from an investment
How is the investment management fee calculated? option’s assets and therefore
This is calculated by multiplying your investment option’s net asset value by are offset against the investment
the relevant percentage fee (from the table above). It is deducted from the returns and are not met by the
investment option before unit prices are worked out and allocated to your members directly.
Member’s Account.
It includes the fees of the investment managers, trustees and any custodians of
the underlying investment products in which investment funds are invested.
The fees do not however include any applicable investment management
performance-based fees that may be charged.
10Returns and risks
In this section, you’ll find out:
■ What returns will I get?
■ What investment options do I have?
■ How do I choose my investment options?
■ Explaining some terms
■ What are my risks?
What returns will I get?
Your return from the Scheme is As investment returns are not This option aims to:
built up over time and based on distributed, these will compound ■■ achieve a rate of return (after
contributions and investment returns. over time, earning further investment
tax and investment management
returns. However, when it comes to
The key factors that determine what fees) that exceeds CPI increases
investments, please remember there
your benefit will be are: by at least 2.5% per annum over
are no guarantees - returns may be
rolling three year period
■■ contributions, including: positive or negative.
■■ the percentage of your pay ■■ over shorter periods, outperform
you contribute and any other
What investment options do the notional return of the
contributions you make I have? benchmark mix of investments.
■■ your employer contributions, The Credit Union KiwiSaver scheme KiwiPlus Balanced (Default option)
■■ the contributions and tax offers you the following choice of
credits from the Government investment options: The KiwiPlus Balanced option might
be suitable if you:
■■ any lump sums you transfer ■■ Kiwi Conservative
into the Scheme; and ■■ are looking for a balance of returns
■■ KiwiPlus Balanced (the default
■■ the impact of any contributions investment option) and risk
holidays you choose to take
■■ Global Growth. ■■ have a long term investment
■■ the net investment returns of the timeframe (5+ years)
investment option(s) you choose You can choose any one or a
combination of these options. ■■ expect to contribute to a KiwiSaver
■■ any taxes payable
scheme for at least
■■ any fees charged to your Kiwi Conservative 5 years and retire in 5-10 years,
Member’s Account (you will need to be 65 or older
The Kiwi Conservative option might
■■ any withdrawals you make before to access your KiwiSaver
be suitable if you:
you retire (if allowed) benefits). Remember, savings can
■■ the effect of compounding returns ■■ are looking for a lower, yet fairly still be invested for the long term
over time stable return
during retirement.
■■ the price(s) of the investment ■■ expect to contribute to a KiwiSaver
scheme for the next 5 years and This investment has a ‘moderate’ level
options in which your Member’s
then retire, (you will need to be 65 of risk. This means that, generally
Account is invested when your
benefit becomes payable. or older at that time to access your speaking, a negative annual return is
KiwiSaver benefits). Remember, expected, on average, once every six
How are the investment returns savings can still be invested for to seven years.
calculated? the long term during retirement
This option aims to:
■■ are looking to withdraw your
Your Member’s Account is allocated ■■ achieve a rate of return (after tax
savings as a deposit on your
“units” in the investment option(s) and investment management
first home after the 3 year
in which it is invested. The value of
minimum timeframe. fees) that exceeds CPI increases
the units will be determined by the
by at least 3% per annum over
trustees, generally on each business This investment has a ‘low’ level of
rolling five year periods
day. Units will reflect any investment risk. This means you may expect to
returns or losses generated by the see a negative annual return, less ■■ over shorter periods, outperform
investment option(s), after providing than approximately one year in every the notional return of the
for fees, costs and taxes. nine years. benchmark mix of investments.
11Global Growth Investment options at a glance:
The Global Growth option might be Kiwi Conservative KiwiPlus Balanced Global Growth
suitable if you:
Level of risk: Low Moderate Moderately High
■■ have a long term investment
timeframe (6+ years) *Mix of investments: Benchmark Ranges Benchmark Ranges Benchmark Ranges
■■ are comfortable with a greater (%) (%) (%) (%) (%) (%)
exposure to growth assets
Trans Tasman Shares 5 0-15 12.5 0-25 19 5-35
(shares) and therefore a higher
level of risk, being ups and downs Global Shares 13 0-30 29 10-60 45 20-80
in the value of your units from Real Assets 10 0-20 17.5 0-30 22 0-30
year to year
Alternative Assets 4 0-10 5.5 0-15 6 0-15
■■ expect to contribute to a KiwiSaver
scheme for at least 5 years and Fixed Interest 40 25-55 27.5 15-40 4 0-10
retire in 10 years or more, (you
Cash 28 15-40 8 0-20 4 0-10
will need to be 65 or older to
access your KiwiSaver benefits). Total Growth Assets 30 60 85
Remember, savings can still be
Total Defensive Assets 70 40 15
invested for the long term during
retirement. *Note that the actual asset allocations may vary from the benchmark shown.
This investment has a ‘moderately
The reference to “Level of risk” in this investment statement is indicative only. It isn’t a
high’ level of risk. On average, you
guarantee or forecast of any return.
may expect to see a negative annual
return, once every five to six years. What if I don’t choose an investment option?
This option aims to: If you don’t choose an investment option, you will be allocated to the KiwiPlus
■■ achieve a rate of return (after tax Balanced option (the Scheme’s ‘default’ investment option). You may change to
and investment management fees) another option or options if you wish.
that exceeds CPI increases by at
least 3.75% per annum over rolling
How do I choose an investment option?
six year periods Review the different options and comparisons above. If you are not sure what any
■■ over shorter periods, outperform of the terms mean, please see the section ‘Explaining some terms’ on page 15. You
the notional return of the could also try our Quick Quiz on page 13.
benchmark mix of investments.
Different people have different investment needs so each of these options is designed
to help people with different objectives. Each option has a different combination of
assets and a different associated level of risk.
12Quick Quiz Step 1:
This quiz is designed to help you To start, simply choose your preferred answer to each question and circle the score
choose an investment option that best next to it.
suits your needs.
Your
To help you choose, this quiz score
broadly assesses how you would
react to investment risk in certain Question 1 When do you plan to cash in some, or all, of your KiwiSaver
circumstances. savings? Remember that KiwiSaver savings are locked in until you are
65 years of age or you complete 5 years of saving in a KiwiSaver scheme
Generally, the higher the proportion
and/or Complying Superannuation Fund, whichever is the later. Savings
of growth investments to defensive
can also still be invested for the long term during retirement.
investments in an option, the higher
the Investment Score Range will be. Less than 5 years 2
For example, the Global Growth 5 to 10 years 4
investment option (85% growth More than 10 years 6
investments) has an Investment
Score Range of 26-34, and the Kiwi Question 2 Imagine you own shares and the share market suddenly
Conservative investment option slumps. Your shares are worth 10% less than they were a month ago.
(70% defensive investments) has an Do you decide to:
Investment Score Range of 12-16.
Sell your shares and invest the money elsewhere 4
Do nothing 5
This Quick Quiz and the associated
Investment Score have been Buy more shares 6
prepared without taking into
Question 3 How would you feel about the value of your savings going up
account the objectives, financial
and down by as much as 20% or more over a short period of time, such
situation or needs of any particular
as a year?
person. Therefore, before acting on
this information you must assess Not concerned 10
whether it is appropriate in light
A little concerned 8
of your own individual objectives,
financial situation or needs. Fairly concerned 5
You should consult a financial
Very concerned 2
advisor before making an
investment decision. Question 4 If you were going to invest in the sharemarket what would you
choose?
Remember that, generally, you
cannot make withdrawals from I wouldn’t invest in shares as they’re too risky 4
your KiwiSaver Member’s Account
A broad selection of shares in established companies 5
until the later of the date you reach
New Zealand Superannuation A mix of shares in both established and small growing companies 6
qualification age (currently 65), or
complete five years membership
Question 5 You inherit $50,000. Where would you invest it?
of a KiwiSaver scheme and/or a In your bank account 0
complying superannuation fund.
A mix of different investments 4
Just shares 6
Step 2: Add up your Investment Score:
Total
13Step 3: 2. How much risk are you comfortable
Match your Investment Score to the options in the following table: with?
Most investments involve some
This investment option Option name Investment % Growth/ Level of risk level of “risk” (the chance of the
may be suitable for timeframe defensive (likelihood investment rising or falling in
you if your Investment investments of a negative
Score falls in this range return)
value). Because some investments
are more volatile than others
12-16 Kiwi At least 3 30/70 Low (depending on the mix of growth
Conservative years and defensive investments)
17-25 KiwiPlus At least 5 60/40 Moderate having a choice of investment
Balanced years options means that you can help
control how much risk you want
26-34 Global At least 6 85/15 Moderately to take.
Growth years High
Investing mainly in defensive
The trustees recommend you seek financial advice before making your decision, investments over the long term
to ensure that your decision is appropriate, having regard to your personal needs generally carries a risk – the risk
and circumstances. that your savings investments
might not keep up with inflation.
Important note:
The investment options within this Scheme have been chosen to suit the lock-in If your money doesn’t grow as fast
rules of KiwiSaver. as inflation, your savings could
lose that buying power and you
Here are some other things to consider: may end up with a smaller nest
1. “When will I need my money?” egg than you need.
Even once you’ve retired, you’re likely to need to invest a large proportion of 3. Other issues you may want to think
your money to give yourself an adequate income in retirement. So for most about
people, the answer to this question will be: ■■ Do you have other
“Not for a long time.” investments outside of
KiwiSaver? Are they
If you have a long time frame, time is on your side. You can focus on mainly growth or defensive
investments that have a high proportion of growth investments (e.g. shares). investments? You may want
With time on your side, you can afford to ride out the inevitable ups and downs to take this into account when
of investment markets.
choosing your investment
On the other hand, if you’ve got a short time frame and if it’s important to avoid option.
short-term falls in the value of your savings, you may wish to select a more ■■ How much longer will you be
conservative approach. For example you are in your 60’s, and plan to take the earning an income and putting
money out once you’ve invested in KiwiSaver for 5 years. money into your KiwiSaver
Member’s Account?
This might also apply if you are looking to take advantage of using your
savings as a deposit on your first home or if you suspect you may emigrate ■■ Are you planning on cashing in
from New Zealand. all or part of your savings when
you retire for things other than
ongoing income?
Before making your investment
decision you should also take into
account all your personal needs
and circumstances as they will
more than likely have an impact
on your overall investment.
It is recommended that you seek
appropriate professional advice
before making any decisions.
14Explaining some terms: publicly listed companies. Shares considered to have more growth than
in New Zealand and Australian defensive characteristics and vice
Investment types companies make up slightly less versa. This means that a particular
There are many different types of than three percent of the world’s alternative asset may be classified
investments, which are normally broken shares, so investing in overseas as either “growth” or “defensive”. In
down into broad asset classes – for companies opens up more general, alternative assets may be
example, shares, real assets, fixed investment opportunities. included as a small component of a
interest, alternative assets and cash. diversified investment portfolio.
The performance of international
Growth investments shares is also influenced by factors like Asset classes
These predominantly include Trans- the economy of a particular country Asset classes are types of
Tasman shares, International shares, and the value of overseas currencies investments. The main asset classes
alternative assets, and real assets.* relative to the New Zealand dollar. are cash, fixed interest, property
These types of investments generally Real Assets and shares. Each asset class has a
have the potential to grow over different level of risk and return -
These assets include property,
the long term but are also likely to the main criteria by which investors
infrustructure and natural resources
experience volatility (ups and downs generally choose what they invest in.
(e.g. commodities). Investments can
in returns from year to year).
be done directly (like a home) or Benchmarks and allocation ranges
Defensive investments indirectly, through buying units in a The benchmark is the targeted long-
These predominantly include fixed trust that invests in a variety of assets. term mix of investments. For example,
interest, alternative assets and Fixed interest the benchmark for the KiwiPlus
cash.* These are generally used to Balanced investment option is 60%
These investments include
help protect the investment from the in growth investments and 40% in
Government bonds, bank bills or
chance of a negative return (i.e. a defensive investments.
company debentures.
fall in the value of the investment).
The mix may vary from this
Defensive investments are likely Basically, you’re investing in something
benchmark, but will generally stay
to produce lower returns long term that pays interest for an agreed period
within the allocation range.
but more stable returns than growth of time. These investments can also
investments. be bought or sold before the fixed Consumer Price Index (CPI)
*Note certain asset classes such as real assets, period of time is up. This is used to measure the rate of
alternative assets and fixed interest can have
both growth and defensive qualities. If general interest rates fall then your increase in inflation. In New Zealand
investment is worth more. Similarly, it’s based on a selection of household
Trans-Tasman shares goods and services.
if interest rates rise then your fixed
Buying a share is actually buying interest investment is worth less. Investments in derivatives
a portion, or share in, a particular
company. In the case of Trans-Tasman Cash The purpose of derivatives (for
shares, the company’s shares are example, “futures” and “options”)
These are fixed interest investments
publicly listed on the New Zealand or is to help mange risk by ‘hedging’.
usually made for very short periods –
Australian Stock Exchange. Derivatives are not physical assets.
usually less than 12 months. It’s similar
The performance of the shares to investing in a bank term deposit. In no case can these derivatives be
generally depends on the financial used to gear the portfolio such that
Alternative assets
performance of the companies in the exposure to any asset class
Alternative assets generally include shall exceed the investment
which you own shares. Performance
investments which do not fit within allocation ranges for the relevant
is also influenced by economic
the traditional broad asset classes investment option.
factors both around the world and
(such as shares, real assets, fixed
within New Zealand and Australia.
interest and cash). Units
It is also influenced by the value of
the Australian dollar relative to the The assets in each investment option
Examples include; absolute return
New Zealand dollar. are divided into units of equal value.
funds (e.g. Hedge funds) and private
Each investor in the Credit Union
International shares equity.
KiwiSaver scheme is allocated units
These are shares in overseas Some alternative assets may be in the relevant investment option.
15What is the investment approach for this Scheme? Your benefits
The funds in the Credit Union KiwiSaver scheme utilise a ‘multi-manager’ Retirement
investment approach, managed by Mercer. You can generally only withdraw a
This means that specialist investment managers are used for different benefit equal to the balance in your
types of investments. More than one investment manager may be used for Member’s Account upon the later of:
each investment type. For example, a panel of managers is used to manage ■■ the date on which you reach the
New Zealand shares and another panel is used for overseas shares. New Zealand superannuation
These panels of investment managers are constructed to provide exposure qualification age (currently 65
to a range of investment management styles. This added diversification helps years); or
achieve consistent performance throughout market cycles. It also allows ■■ the date on which you have been
Mercer to appoint and review the most appropriate specialist fund manager a member of a KiwiSaver scheme
at any point in time. (and/or a Complying Superannuation
Fund) for five years.
Mercer mainly uses an active investment strategy. Active fund managers that
In these circumstances, the benefit will
are highly rated by Mercer have had a proven ability to achieve returns over and
generally be paid in total as a lump sum,
above those of passive managers.
but you can also leave your savings in
Mercer invests in research of fund managers, financial markets and investment the Scheme and withdraw all or part at
strategies. By leveraging its global scale, Mercer provides leading edge risk any future date, or purchase an annuity
mitigation and the latest investment strategies - cost-effectively. from a life insurance company.
The trustees may permit you to make
How do I monitor my investment performance? an early partial or full withdrawal in the
To calculate what your savings are worth, simply multiply the unit price of the following circumstances:
relevant investment option by your number of units. Help for first home buyers
For example, if you’ve 30,000 units and the unit price is declared to be After you’ve been a member of
$1.1000 your savings would be worth $33,000. If in a week’s time the unit price KiwiSaver for three years, you
increases to $1.2000 the value of your savings would also rise (to $36,000). On can choose to withdraw your
the other hand if the unit price was to decrease to $1.0000 the value of your own contributions (excluding the
savings would drop (to $30,000). Government’s $1,000 kick-start
contribution and member tax credits)
With the Credit Union KiwiSaver scheme, units are usually valued on a daily to put towards buying your first home
basis. This makes it easy for you to track the value of your savings as they or a subsequent home if you are in the
move up and down with the investment markets. same financial position as a first-home
You can monitor the performance of your investments by checking the buyer (as determined by Housing New
recent unit prices online at www.cukiwisaver.co.nz or by calling (toll free in Zealand Corporation). To qualify for a
New Zealand) 0800 CU Kiwi (0800 28 5494) withdrawal you need to meet detailed
criteria. Contact the Helpline for details.
In addition, if you’ve been making
contributions to KiwiSaver (or a work-
based Complying Superannuation
Fund) for at least three years, you
may be entitled to a first home deposit
subsidy from Housing New Zealand
Corporation.
The subsidy is $1,000 per year of
KiwiSaver scheme membership up to a
maximum of $5,000 for five years. The
eligibility criteria are set by Housing
New Zealand Corporation as well as
other criteria and will include household
income and regional house price caps.
For more information visit:
16
www.hnzc.govt.nz.Significant financial hardship Serious illness employer contributions, to a foreign
You may be permitted to make You may also be permitted to make superannuation scheme authorised
a withdrawal if the trustees are an early withdrawal if the trustees are under regulations made under the
reasonably satisfied that you are reasonably satisfied that you are KiwiSaver Act 2006. Contact the
suffering or are likely to suffer suffering a serious injury, illness or trustees for details of approved
significant financial hardship (as disability that: foreign superannuation Schemes.
defined in the KiwiSaver Act). The
■■ results in you being totally and How to apply for an early withdrawal
trustees must also be satisfied that
permanently unable to engage
reasonable alternative sources of Forms and documentation required
in work for which you are suited
funding are not available or have to support an application for an early
by your experience, education or
been exhausted. withdrawal in the event of significant
training or a combination of those
financial hardship, serious illness or
You may withdraw an amount up things
permanent emigration are available
to the maximum of your Member’s or for downloading on cukiwisaver.co.nz
Account balance (excluding the
■■ poses a serious and imminent risk or by contacting the helpline on 0800
Government’s $1,000 kick-start
of death. CU KIWI (0800 28 5494).
contribution and member tax credits).
However, the trustees have the You may withdraw an amount up Accumulated member tax credits can
discretion to limit the amount you may to a maximum of your KiwiSaver only be withdrawn once you give the
withdraw. Member’s Account balance including trustees a statutory declaration of the
the $1,000 kick-start contribution, periods that you have had your principal
Significant financial hardship can arise
any member tax credits and residence in New Zealand. Any member
because of:
employer contributions. tax credits may not be withdrawn if the
■■ your inability to meet minimum trustees have received notice of an
living expenses; or Death
incorrect claim for a tax credit.
■■ your inability to meet mortgage On your death whilst a Scheme
repayments on your principal member, a benefit equal to the Legislation requiring release
family residence resulting in the balance in your Member’s Account of funds
mortgagee seeking to enforce the will be payable to your personal The trustees must comply with
mortgage; or representative who are the executors any legislation that requires funds
or administrators of your estate. to be released from the Scheme.
■■ the cost of modifying a residence
The trustees, on being notified of An example of this is the Property
to meet special needs arising
your death, will switch your total (Relationships) Act 1976.
from your or your dependant’s
KiwiSaver Member’s Account into the
disability; or
Kiwi Conservative investment option Transfers to another KiwiSaver
■■ the cost of medical treatment for pending payment. scheme
an illness or injury to you or your
dependant; or Permanent emigration from The KiwiSaver Act allows you to
■■ the cost of palliative care for you New Zealand transfer your funds to another
or your dependant; or You may also be permitted to make KiwiSaver scheme at any time. In
a withdrawal if you permanently certain circumstances, funds will also
■■ the cost of a funeral for your
emigrate from New Zealand. be transferred if you are involuntarily
dependant; or
moved to another KiwiSaver scheme
■■ your suffering from a serious One year after you permanently under the Act.
illness (as described below). emigrate, you may apply to withdraw
your KiwiSaver Member’s Account If payment of any benefit would
balance excluding any member tax contravene any legal provision
credits and any unvested employer applicable to the Scheme, the trustees
contributions. Member tax credits may decline to make the payment
held in your Account will be repaid to or defer the payment until such time
the Government. as the payment would no longer
contravene such a provision.
At any time after you permanently
emigrate you may apply to transfer Note that you may only be a member
your KiwiSaver Member’s of one KiwiSaver scheme at any
Account balance, excluding any given time.
member tax credits and unvested 17Payment of your benefit
Electing a Prescribed Investor
Your benefit will usually be paid in total as a cash lump sum, but you can also leave Rate (PIR)
your savings in the Scheme and withdraw all or part at any future date, or arrange To ensure that the correct rate of tax
regular payments. You can access you account upon the later of the date on which is applied to your investment income
you reach New Zealand superannuation qualification age (currently 65), and the you need to provide the trustees
date on which you have been a member of a KiwiSaver scheme for five years. with your PIR. To work out your PIR
simply follow the chart below.
Call (toll free in New Zealand) 0800 CU KIWI (0800 28 5494) for more information.
Will my returns be affected by taxation? Start here
Under current New Zealand tax laws: Your
Are you a NZ tax No
PIR is
■■ compulsory employer contributions up to the lesser of an amount equal to resident individual?
28%
your contributions or 2% of your before-tax pay, are exempt from compulsory
employer superannuation contribution tax (ESCT) until 31 March 2012. Any Yes
employer contributions over 2% of your before-tax pay are subject to ESCT.
Was your taxable
From 1 April 2012, all employer contributions will have ESCT deducted from
income in both of the Your
them before they are credited to your account. ESCT is payable by your Yes
previous two income PIR is
employer and deducted at your personal marginal tax rate. years* $48,001 or 28%
■■ the trustees will calculate the income tax liability for the Credit Union KiwiSaver more?
scheme
No
■■ under current New Zealand tax laws you cannot claim tax deductions on your
KiwiSaver contributions. The Trustee will calculate the tax on investment Was your combined
income for each member of the Scheme under the Portfolio Investment Entity taxable income plus
Your
(PIE) tax rules. Your assessable investment income is taxed at a Prescribed PIE income/loss in Yes
PIR is
Investor Rate (PIR) that applies to you and which you have advised the both of the previous
28%
two income years*
Scheme. On joining the Scheme, if you are eligible for either the 10.5% or
$70,001 or more?
17.5% PIR rate, you must provide your correct PIR and an IRD number
otherwise the default PIR rate will be applied. You can advise these by No
completing a Change of PIR form, or updating your PIR at
www.cukiwisaver.co.nz For either of the
previous two income
■■ during any period when amounts are held by Inland Revenue on your behalf, years*, was your
Inland Revenue will credit interest using an after-tax interest rate. No further taxable income Your
tax will be payable by you, or by the Credit Union KiwiSaver scheme. No
less than $48,001 PIR is
and your combined 28%
KiwiSaver schemes are subject to restrictions on withdrawals, which means that
taxable income plus
under current legislation, fund withdrawal tax does not apply. PIE income/loss less
than $70,001?
The explanations regarding taxation matters contained in this Investment
Statement reflect the taxation regime current at the date of preparation of
Yes
the Investment Statement. The trustees recommend that you seek your own
professional advice on taxation matters. For either of the
Your
previous two income No
PIR is
years*, was your
17.5%
taxable income
less than $14,001
and your combined
Your
taxable income plus Yes
PIR is
PIE income/loss less
10.5%
than $48,001?
*Previous two income years refers to the
two years prior to the tax year that the PIR
is being applied to. (For example, use your
income for the 2010 and 2011 tax years to
18 work out your 2011/2012 PIR.)Are investment returns affected by reserves?
The Scheme has no reserve account. Returns (whether positive or negative) are
fully allocated to your Member’s Account through variations in unit prices.
Can payment of my benefit be withheld?
Subject to the KiwiSaver Act 2006, payment of your benefit or any withdrawal or
transfer may be deferred if the trustees:
■■ suspend the redemption of units of any investment option in which your
Member’s Account is invested. This may occur when the trustees believe that
the value of those units cannot be calculated in a manner that is fair to all
Scheme members; or
■■ are unable to realise sufficient underlying assets of the relevant investment
option(s) in order to fully satisfy a payment request; or
■■ consider it would contravene any legal provisions applicable to the Scheme by
making the payment.
Who is responsible for payment?
The trustees are legally responsible for paying your benefits in accordance with the
trust deed and the KiwiSaver Act 2006. Your benefits are paid by redeeming the
appropriate number of units allocated to your KiwiSaver Member’s Account.
None of the trustees, New Zealand Association of Credit Unions, or any
associated Credit Union, the Crown, Mercer (N.Z.) Limited, Mercer Inc, Marsh
& McLennan Companies Inc, any other member of the worldwide Marsh &
McLennan Group, or any investment manager or other person guarantees the
repayment of capital or the investment performance of the Scheme or any of the
investment options. The obligations of the trustees are not guaranteed by any
third party. No amount of return is promised by any person. There is no guarantee
from the Crown in respect of the Credit Union KiwiSaver scheme or any investment
options in the Credit Union KiwiSaver scheme. No amount of returns, quantifiable
as at the date of this Investment Statement and enforceable by members, has
been promised. There are no specified dates on which, or frequency with which,
withdrawals will be paid.
When will I receive my benefit?
Your benefit will normally be paid when you reach age 65 or you have been a
member of a KiwiSaver scheme (and/or a Complying Superannuation Fund) for five
years, whichever is the later.
For exceptions to this, please refer to the “Can payment of my benefit be withheld?”
sections.
19You can also read
