1 00:00:00,160 --> 00:00:02,200 Speaker 1: So we've got some burg changes coming to your Key 2 00:00:02,200 --> 00:00:04,680 Speaker 1: we Save A. Government is increasing the minimum contribution rate 3 00:00:04,720 --> 00:00:08,559 Speaker 1: for employees and employers, or the default rather, from three 4 00:00:08,600 --> 00:00:10,479 Speaker 1: percent to four percent. But at the same time it's 5 00:00:10,560 --> 00:00:12,840 Speaker 1: taken out, it's basically having its own contribution rate and 6 00:00:12,880 --> 00:00:14,720 Speaker 1: if you're earning too much money, you can get nothing 7 00:00:14,760 --> 00:00:17,160 Speaker 1: at all. Sam Dickey from Fisher Funds is with us. 8 00:00:17,040 --> 00:00:18,560 Speaker 2: A Sam good evening. 9 00:00:19,239 --> 00:00:21,279 Speaker 1: So what I'm well, thank you, So what do you 10 00:00:21,280 --> 00:00:24,000 Speaker 1: make Let's start with the default rate going from three 11 00:00:24,000 --> 00:00:25,079 Speaker 1: to four percent. What do you think? 12 00:00:26,239 --> 00:00:29,120 Speaker 2: I think it's exciting. It's exciting generally that we're paying 13 00:00:29,440 --> 00:00:32,479 Speaker 2: this much attention to something as critical as key's retirement savings. 14 00:00:32,520 --> 00:00:34,239 Speaker 2: And that is a step in the right direction. So 15 00:00:34,280 --> 00:00:37,239 Speaker 2: we've gone from three percent to four percent. It's not 16 00:00:37,280 --> 00:00:39,280 Speaker 2: compulsory like it is in Australia, but it's a step 17 00:00:39,280 --> 00:00:42,360 Speaker 2: in the right direction. And as you know, what becomes 18 00:00:42,360 --> 00:00:45,600 Speaker 2: compulsory is if the employee does elect to put four 19 00:00:45,640 --> 00:00:48,280 Speaker 2: percent or contribute four percent of the key we save it, 20 00:00:48,320 --> 00:00:52,000 Speaker 2: then it's compulsory that the employer matches it. And the 21 00:00:52,080 --> 00:00:53,320 Speaker 2: other thing is that a step in the right direction. 22 00:00:53,400 --> 00:00:55,840 Speaker 2: I'm sure my thirteen and fifteen year old sons will 23 00:00:55,840 --> 00:00:58,760 Speaker 2: be delighted as the extension of the eligibility of the 24 00:00:58,760 --> 00:01:01,200 Speaker 2: government contributions to six seventeen year olds. 25 00:01:01,560 --> 00:01:03,480 Speaker 1: Does it mean your sons have to get jobs in 26 00:01:03,560 --> 00:01:06,120 Speaker 1: order to qualify for that? 27 00:01:06,480 --> 00:01:08,360 Speaker 2: That's music to my ears. I hope that's the case. 28 00:01:09,120 --> 00:01:11,360 Speaker 1: I love what we're doing here. What do you make 29 00:01:11,360 --> 00:01:14,360 Speaker 1: though off the government harving its contribution for lower earners 30 00:01:14,360 --> 00:01:17,039 Speaker 1: and then cutting off the one to eighty thousand plus. 31 00:01:18,240 --> 00:01:22,080 Speaker 2: I think balancing the books is important, and that's part 32 00:01:22,120 --> 00:01:23,959 Speaker 2: of what they're trying to do there, But it's not 33 00:01:24,120 --> 00:01:27,040 Speaker 2: clear to me how harving of the government's contribution sends 34 00:01:27,040 --> 00:01:29,480 Speaker 2: the right signal to save us. And when you compound 35 00:01:29,480 --> 00:01:31,800 Speaker 2: two undred and fifty bucks for forty seven years, so 36 00:01:32,000 --> 00:01:33,880 Speaker 2: say from the age of eighteen to the age of 37 00:01:33,880 --> 00:01:37,240 Speaker 2: sixty five, at market returns of say seven percent, it 38 00:01:37,240 --> 00:01:39,760 Speaker 2: comes to sort of sixty five to seventy thousand, which 39 00:01:39,840 --> 00:01:41,960 Speaker 2: is a big number. Having said that, they've come all 40 00:01:42,000 --> 00:01:45,080 Speaker 2: away from matching US dollar for dollar to matching US 41 00:01:45,120 --> 00:01:47,920 Speaker 2: twenty five cents on the dollar. So it's pretty clear 42 00:01:47,960 --> 00:01:49,280 Speaker 2: the direction of travel and. 43 00:01:49,560 --> 00:01:51,760 Speaker 1: Do you believe the direction of travelers? The next move 44 00:01:51,880 --> 00:01:55,040 Speaker 1: is nobody gets a government contribution at all. 45 00:01:55,240 --> 00:01:56,720 Speaker 2: I'm not sure about that. Like if you look around 46 00:01:56,720 --> 00:01:59,280 Speaker 2: the world, in Australia there is still government contributions for 47 00:01:59,600 --> 00:02:02,680 Speaker 2: low and earners. And I do think it does send 48 00:02:02,720 --> 00:02:05,680 Speaker 2: a signal to savers. And I do think that you know, 49 00:02:05,720 --> 00:02:08,320 Speaker 2: the power of compounding is real. And when you consider 50 00:02:08,360 --> 00:02:10,440 Speaker 2: the average key we say a balance today in New 51 00:02:10,520 --> 00:02:13,880 Speaker 2: Zealand is less than forty thousand dollars, That two hundred 52 00:02:13,880 --> 00:02:16,079 Speaker 2: and fifty dollars matters for an eighteen year old. That's 53 00:02:16,240 --> 00:02:20,239 Speaker 2: seventy thousand dollars compounded up over forty seven years. So 54 00:02:20,400 --> 00:02:22,239 Speaker 2: I do think the signaling matters. 55 00:02:22,520 --> 00:02:25,880 Speaker 1: And over in Australia, at what point, what is the 56 00:02:25,960 --> 00:02:29,080 Speaker 1: income threshold before the government doesn't give you anything? At 57 00:02:29,120 --> 00:02:30,919 Speaker 1: what point are they still giving you money? 58 00:02:33,040 --> 00:02:34,480 Speaker 2: Oh, I'm going to have to I mean, I imagine 59 00:02:34,520 --> 00:02:35,000 Speaker 2: that one. 60 00:02:34,800 --> 00:02:36,880 Speaker 1: Because it must be lower than it is here, Sam, 61 00:02:36,880 --> 00:02:39,320 Speaker 1: one hundred and eighty thousand dollars is a reasonable whack. 62 00:02:40,440 --> 00:02:43,240 Speaker 2: Yes, that's right. So what's that three to four percent 63 00:02:43,240 --> 00:02:46,000 Speaker 2: of New Zealanders and over that amount and they're no 64 00:02:46,040 --> 00:02:48,000 Speaker 2: longer eligible for the two hundred and fifty dollars of 65 00:02:48,040 --> 00:02:49,640 Speaker 2: government contributions. 66 00:02:49,240 --> 00:02:51,639 Speaker 1: Which means they're not like ninety six percent of us 67 00:02:51,680 --> 00:02:52,560 Speaker 1: are eligible. 68 00:02:53,919 --> 00:02:57,560 Speaker 2: That's right, we're eligible for the two hundred and fifty dollars, 69 00:02:57,560 --> 00:02:59,520 Speaker 2: and now our sixteen and seventeen year olds are eligible 70 00:02:59,560 --> 00:03:03,200 Speaker 2: as well. Now, so they take it from the one 71 00:03:03,240 --> 00:03:05,120 Speaker 2: hundred and eighty thousand dollars earners and they give it 72 00:03:05,240 --> 00:03:08,440 Speaker 2: to our young leaders of tomorrow. 73 00:03:08,560 --> 00:03:10,800 Speaker 1: I guess yeah, which is fair enough. But I mean, 74 00:03:10,800 --> 00:03:12,600 Speaker 1: if what you're trying to do is sort of you know, 75 00:03:13,040 --> 00:03:14,520 Speaker 1: I don't know. I mean, I just think I probably 76 00:03:14,520 --> 00:03:17,040 Speaker 1: would have come tested at a lower level. But anyway, 77 00:03:17,120 --> 00:03:18,880 Speaker 1: I mean what you were looking for here, which is 78 00:03:18,880 --> 00:03:20,320 Speaker 1: more important, as you were looking to see a bit 79 00:03:20,360 --> 00:03:23,360 Speaker 1: of a long term roadmap, right, are you having to 80 00:03:23,680 --> 00:03:25,200 Speaker 1: I mean I don't. I don't think you got that. 81 00:03:25,240 --> 00:03:26,640 Speaker 1: So are you having to kind of fill it in 82 00:03:26,880 --> 00:03:27,960 Speaker 1: by filling in the blanks? 83 00:03:29,040 --> 00:03:31,200 Speaker 2: I think so. I mean we would love I'm sure 84 00:03:31,360 --> 00:03:35,119 Speaker 2: we and employers and savers in other words, kiwis would 85 00:03:35,160 --> 00:03:37,760 Speaker 2: love to have seen a ten year roadmap and so 86 00:03:37,760 --> 00:03:39,440 Speaker 2: they can all easily make a plan. And what I 87 00:03:39,480 --> 00:03:42,320 Speaker 2: mean by that is a plan on how to close 88 00:03:42,400 --> 00:03:45,480 Speaker 2: the yawning gap between the average kiis have a balance 89 00:03:45,520 --> 00:03:48,840 Speaker 2: of approximately forty thousand dollars and the six hundred and 90 00:03:48,920 --> 00:03:52,480 Speaker 2: fifty thousand. Now, that's the midpoint of the range of 91 00:03:52,560 --> 00:03:57,080 Speaker 2: a massive university study that on average a couple needs 92 00:03:57,080 --> 00:03:59,400 Speaker 2: a retirement and that, by the way, here, that's assuming 93 00:03:59,480 --> 00:04:01,720 Speaker 2: they already living in a mortgage free house. So that's 94 00:04:01,720 --> 00:04:04,400 Speaker 2: a yawning gap between the forty thousand dollars ballance today 95 00:04:04,440 --> 00:04:06,760 Speaker 2: and six hundred and fifty thousand dollars. And I think 96 00:04:06,840 --> 00:04:09,240 Speaker 2: that needs long term planning, in a long term roadmap. 97 00:04:09,320 --> 00:04:11,880 Speaker 1: Like you say, yeah, hey, Sam, thank you. Always appreciate 98 00:04:11,960 --> 00:04:14,080 Speaker 1: talking to you, mate, Appreciate your expertise at Sam dickey 99 00:04:14,120 --> 00:04:14,840 Speaker 1: Official Funds. 100 00:04:15,400 --> 00:04:18,599 Speaker 2: For more from Hither Duplessy Allen Drive, listen live to 101 00:04:18,680 --> 00:04:21,719 Speaker 2: news talks it'd be from four pm weekdays, or follow 102 00:04:21,760 --> 00:04:23,480 Speaker 2: the podcast on iHeartRadio.