Mercer knows when it comes to saving for retirement and growing your nest egg, every bit counts. As recently published by the Commission for Financial Capability and Inland Revenue, many KiwiSaver members are missing out on as much as $521 a year. Mercer, as part of its ongoing commitment to helping members maximise KiwiSaver, has found some interesting trends and result over the past few years.
Sarah Whitelock Consumer Wealth Leader, said that Mercer found that, while many members are aware of their KiwiSaver, there is a lack of knowledge and action regarding member tax credits for some.
“Our goal is to help members understand KiwiSaver, the available member tax credits, and the importance of planning early. With this in mind, we are constantly striving to enhance our communications to members to ensure they are engaged early enough and at the right time, and we are seeing some really promising results” she said.
An example of this success is in 2015 Mercer started sending birthday emails to members turning 18. Among other things, the email told them they were now eligible to start receiving member tax credits. Three years later, we are seeing an improvement for the 18 to 24 year old age group in receiving member tax credits of around 12%.
“It is encouraging to see more and more members in this age group maximise their savings. In fact, this group now receives more of the available member tax credits than those aged 25 to 34,” said Ms Whitelock.
Following on from this success, Mercer introduced additional communications targeting other age groups using different triggers. “Through this communication, we were also able to identify key areas of concern,” said Ms Whitelock.
“Of those members we target annually, almost one in five told us they will not be topping up to maximise their member tax credits. There are differing reasons – affordability; not appreciating the impact of receiving the full member tax credit; and confusion around eligibility are among them.
“We found that helping members see the advantages of member tax credits and how much to top up as a dollar amount aided in breaking down some of the barriers and confusion around member tax credits. Particularly for groups of members who are only eligible for a partial member tax credit because they either turned 18 or 65 or joined KiwiSaver during the year.
“When it comes to saving for your retirement, ensuring members stay on top of contributions throughout the year and knowing how much they are contributing is very important,” she said.
In closing, Ms Whitelock highlighted a few other simple things we all can do that will help grow our nest egg:
- Provide your current email address, so that your KiwiSaver provider can send you reminders throughout the year but also before the annual deadline. We have seen a significant difference in action between members who haven’t provided an email address compared to those who have.
- Contribute through the year, and if you can set up a regular payment, that’s great. Remember any amount helps get some member tax credits, we’ve seen contributions as little as 50 cents
- Employers can also help their employees maximise member tax credits. Check in with your staff to ensure your employees understand member tax credits. They will only thank you!
For further information on Member Tax Credits and your KiwiSaver visit www.mercerfinancialservices.co.nz.
Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Across the Pacific, organisations look to Mercer for global insights, thought leadership and product innovation to help transform and grow their businesses.
Mercer’s more than 22,000 employees are based in 43 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With more than 60,000 colleagues and annual revenue over $13 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit https://www.mercer.co.nz