Myths about KiwiSaver: Part 3
More than two million people have joined KiwiSaver.
But KiwiSaver expert Binu Paul says many people are a bit confused about how the savings scheme works. He is the founder of SavvyKiwi, an app that allows people to manage their KiwiSaver account.
So this week Newshub is looking at some of the myths and misunderstandings about KiwiSaver.
Binu Paull says people are often offered free savings advice, or are offered an incentive to sign up to a particular scheme. But he cautions that nothing is really free.
He says: "Typically, intermediaries are paid a finder's fee and then a commission percentage of your actual KiwiSaver balance. The provider pays this to the agent who recommends the provider to you.
"This creates a massive conflict of interest. So always check how the intermediary gets paid. It is best if you get it in writing so you can hold them to it. Ensure whoever you get direction from earns no kickbacks from the provider."
So how important is the convenience factor?
Binu Paul says some providers are able to consolidate all your financial accounts in one place. This is a major benefit considering there is less hassle to keep track of your finances. They may also be able to package up an offer for you with other products.
"But, remember convenience may come at a price. So do incentives that appear appealing at face value. Small differences in returns will be magnified over a number of years."
Convenience should only be one out of many factors to help you make a decision. So don't simply sign a form signing off your approval to switch your fund based only on that factor.