Kiwisaver

It's Friday. Earwigging in a cafe I hear the unmistakable tones of financial chat wafting over the tables.

It's the day after Bill English's Budget and he seems to have upset a whole gaggle of coffee sippers. 

"I'm not putting my money in that KiwiSaver thing cos there's nothing free any more".

They're young, they're trendy and they look like students. 

Bill has just taken away $1,000 from each of them. Looks like a $5,000 problem brewing at just one table.

Wind back 24 hours. Thursday, budget day.

My mother sends a text. "No more KiwiSaver kick-start".  It dawns on me this is a text full of glee.

Wednesday morning she went to ANZ and opened a KiwiSaver.

On the cusp of retirement, there was an opportunity to get $1,000 and she finally got around to securing it.

Talk about cutting it fine. No one had any inkling of this announcement, but my mum will now be one of the last few New Zealanders to get a few bob out of Bill.

Yes, it was a sad week for those who haven't yet joined KiwiSaver.

Some will have parents who opened a plan early and got the kick-start, but many now feel like they're in the minority group who missed out.

As usual, the Government didn't present the change very well.

Neither have the media, or the funds management industry.

Everyone's sitting around worrying how to market a product that no longer has a free $1000 sign around its neck. 

For a 20-year-old student, here's what the Government needed to tell them; over the next 45 years we'll give you $23,000 to help with your retirement plan.

We used to give you $24,000.  It's only 4 per cent less, so 'get over it'.

Well, maybe that's not the best marketing slogan I've ever thought up, but it is succinct.

Of course for every $521 the government adds annually, you'll have to put in $1042 yourself. 

There is a burning desire to steer the Government and KiwiSaver managers back to the positive. Let's erect some marketing banners:

Government freebies – unless removed:

· 20 year olds - $23,000 free money

· 30 year olds - $18,000 free money

· 40 year olds - $13,000 free money

· 50 year olds - $7,800 free money

· 60 year olds - $2,600 free money

Bill has snaffled a sneaky $1,000 off new KiwiSavers, but you can hardly call the man miserable. He's handed out $2.5 billion in kick-starts.

For the cynics, yes, this money goes towards the fees these schemes cost. Managing money isn't a free game.

You'll pay fees the world-over and governments in other countries don't make contributions towards this. 

On that note, at some point in the future you can probably expect to see the annual $521 reduced or withdrawn.

It is not entirely realistic to expect a 20-year old to get $23,000. The message is simply to get what you can while it lasts. 

If we want to keep beating the marketing drums, employers need to step up and take a bow.

Your savings will be matched buck for buck, on 3 percent of your salary.

A quick spreadsheet for a 20-year-old, starting at $30,000 income and increasing $1000 a year for 45 years, will result in their employer putting in $70,000.

Are our coffee-sipping students really going to sulk over $1,000 when there's a possible $93,000 coming their way from the government and their boss?

It's not their fault they didn't hear the message correctly on budget day – lets change the headlines and educate them. 

Finally, let's not forget the whole point of KiwiSaver. The investment returns.

The numbers will be erratic. Periods of negative returns will occur. Yet when things go well, they go very well.

Look at ANZ as a quick example.

Their Growth Fund is up 12 per cent a year over 5 years. That's a gain of 76 per cent (because it's compounded).

Over one year this fund is up 18 percent. There are many managers doing a sterling job in terms of performance.

While this is no guide to the future, it's certainly giving retirement pots a huge boost right now.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.