Latest news with #Simplicity
1News
18 hours ago
- Business
- 1News
What US strikes on Iran mean for KiwiSaver, petrol prices
Escalation of the conflict in the Middle East poses a major threat to New Zealand's economy, commentators say — as well as households' KiwiSaver balances and petrol prices. There were earlier warnings that the conflict was having a noticeable but contained effect on oil prices, but that there could be a much more significant economic impact if the conflict broadened. Infometrics chief executive Brad Olsen said the US attacks at the weekend were that scenario. "It does obviously ratchet up tensions enormously. But the question now is how the Iranian side respond and if they respond as some of their advisers have been talking about and how they've responded sometimes in the past." He said if there were attacks on US shipping or attempts to limit access through the Strait of Hormuz, oil prices could spike. ADVERTISEMENT "There's a question come Monday, as the markets open, how everyone will digest this. I don't think anyone is thinking that there's an easy ability to de-escalate, but I think it will hinge on the Iranian response. US President Donald Trump speaks from the East Room of the White House in Washington after the US military struck three Iranian nuclear and military sites. (Source: Pool via AP) "If they do ratchet up the tension further, if this starts to broaden out into shipping attacks, I think market expectations and worries about oil supply will increase substantially. "The question is, just to what degree do you price this, and how do markets look at that?" He said shares in companies in defence-based industries could increase in value. "Everyone will think the war's on and certainly so far there's nothing that would stop you thinking the same." People might also shift to defensive assets, he said, such as utilities. ADVERTISEMENT The fact that New Zealand was sending a defence force aircraft and foreign affairs personnel into the region proved how concerned the government was, he said. Shamubeel Eaqub, chief economist at KiwiSaver provider Simplicity, said there could be bumpiness ahead for households. "So far, market pricing is unexpectedly calm. Oil prices haven't increased very much, equity prices haven't changed much, even though we had already seen the beginning of that escalation before the weekend started. "But with the US involvement now, the uncertainty is even higher than before." He said the experience of the Gulf War in the 1990s showed the potential impacts. "The channels were two-fold... the first was around the price of oil and the second was really around the uncertainty in financial markets in general. "Now, compared to the Iraq wars, the world is a lot less dependent on oil than it used to be, which is also true for New Zealand, so the oil intensity of the economy is less. It doesn't mean we are immune, it just means we are less exposed." ADVERTISEMENT He said it was not yet clear how sensitive financial markets would be but the bigger issue was the fear and uncertainty that would be created. "That's what we tend to see when there is a risk-off, equity markets tend to fall … the New Zealand dollar tends to get more volatile. Quite often it weakens when people are more risk averse, which means it's generally speaking a net positive for exporters but a net negative for the rest of us because we tend to consume a lot of imported products." He said it could take 12 to 18 months for the full effects of big geopolitical events to flow through. "But the initial effect quite often tends to be very much fear-driven, financial markets-driven, commodity price-driven things." He said for most New Zealanders, the message was to "hang in there". "The oil price - you have no control over it. We are price takers, so whatever you can do in your own control to be able to manage your transport [might help]." He said when it came to financial markets, that was also generally out of an investor's hands. But if they were worried about their KiwiSaver accounts, they should remember that it was time in the market that would make the difference over the long term rather than short-term movements. ADVERTISEMENT Koura KiwiSaver founder Rupert Carlyon said the biggest risk was to inflation. "If it does turn into a broader Middle East war and potentially shutting down the Strait of Hormuz, they we are likely to see higher oil prices, which will flow through to everything and shipping delays, making it harder and more expensive to import things here in New Zealand. "The Reserve Bank will be watching this very carefully, as anything that has the potential to skew inflation to the upside will mean a halt to further interest rate cuts. "I suspect markets will open down in anticipation of the conflict, though as we have seen over the past few years, markets fear more about the prospect of conflict rather than the reality of it. We have already seen this playbook with Ukraine and Russia and Gaza and Israel. Definitely no need to worry or panic."
RNZ News
20 hours ago
- Business
- RNZ News
NZ share market falls after US strikes on Iran
NZX sign Photo: RNZ / Angus Dreaver The New Zealand sharemarket had a sharp fall in early trading on Monday in response to the Middle East conflict. The benchmark NZX-50 index has fallen more than 100 points, or about 08 percent, on light turnover. The New Zealand market is the first in the world to open after US bombing raids on three Iranian nuclear facilities. New Zealand stocks have limited direct exposure to the conflict, but companies vulnerable to travel and freight disruption and higher fuel costs are the most likely to fall. Indications are the Australian and Japanese markets are likely to fall somewhere around half a percent when they open in a few hours. Read more: Commentators say escalation of the conflict in the Middle East poses a major threat to New Zealand's economy - as well as households' KiwiSaver balances and petrol prices. Shamubeel Eaqub, chief economist at KiwiSaver provider Simplicity, said there could be bumpiness ahead for households. With US involvement the uncertainty was higher than before, but for most New Zealanders, the message was to "hang in there". "The oil price - you have no control over it. We are price takers, so whatever you can do in your own control to be able to manage your transport [might help]." He said when it came to financial markets, that was also generally out of an investor's hands. But if they were worried about their KiwiSaver accounts, they should remember that it was time in the market that would make the difference over the long term rather than short-term movements.
Otago Daily Times
a day ago
- Business
- Otago Daily Times
What US attacks on Iran mean for KiwiSaver, petrol prices
By Susan Edmunds of RNZ Escalation of the conflict in the Middle East poses a major threat to New Zealand's economy, commentators say - as well as households' KiwiSaver balances and petrol prices. There were earlier warnings that the conflict was having a noticeable but contained effect on oil prices - but that there could be a much more significant economic impact if the conflict broadened. Infometrics chief executive Brad Olsen said the US attacks at the weekend were that scenario. "It does obviously ratchet up tensions enormously. But the question now is how the Iranian side respond and if they respond as some of their advisers have been talking about and how they've responded sometimes in the past." He said if there were attacks on US shipping, or attempts to limit access through the Strait of Hormuz, oil prices could spike. "There's a question come Monday as the markets open how everyone will digest this. I don't think anyone is thinking that there's an easy ability to de-escalate, but I think it will hinge on the Iranian response. "If they do ratchet up the tension further, if this starts to broaden out into shipping attacks, I think market expectations and worries about oil supply will increase substantially. The question is, just to what degree do you price this and how do markets look at that?" He said shares in companies in defence-based industries could increase in value. "Everyone will think the war's on and certainly so far there's nothing that would stop you thinking the same." People might also shift to defensive assets, he said, such as utilities. The fact New Zealand was sending a defence force aircraft and foreign affairs personnel into the region proved how concerned the government was, he said. Shamubeel Eaqub, chief economist at KiwiSaver provider Simplicity, said there could be bumpiness ahead for households. "So far market pricing is unexpectedly calm. Oil prices haven't increased very much, equity prices haven't changed much even though we had already seen the beginning of that escalation before the weekend started. "But with the US involvement now the uncertainty is even higher than before." He said the experience of the Gulf War in the 1990s showed the potential impacts. "The channels were two-fold... the first was around the price of oil and the second was really around the uncertainty in financial markets in general. "Now, compared to the Iraq wars, the world is a lot less dependent on oil than it used to be, which is also true for New Zealand, so the oil intensity of the economy is less. It doesn't mean we are immune it just means we are less exposed." He said it was not yet clear how sensitive financial markets would be but the bigger issue was the fear and uncertainty that would be created. "That's what we tend to see when there is a risk-off, equity markets tend to fall … the New Zealand dollar tends to get more volatile. Quite often it weakens when people are more risk averse, which means it's generally speaking a net positive for exporters but a net negative for the rest of us because we tend to consume a lot of imported products." He said it could take 12-18 months for the full effects of big geopolitical events to flow through. "But the initial effect quite often tends to be very much fear-driven, financial markets-driven commodity price-driven things." He said for most New Zealanders, the message was to "hang in there". "The oil price - you have no control over it. We are price takers, so whatever you can do in your own control to be able to manage your transport [might help]." He said when it came to financial markets, that was also generally out of an investor's hands. But if they were worried about their KiwiSaver accounts, they should remember that it was time in the market that would make the difference over the long term rather than short-term movements. Koura KiwiSaver founder Rupert Carlyon said the biggest risk was to inflation. "If it does turn into a broader Middle East war and potentially shutting down the Strait of Hormuz, they we are likely to see higher oil prices, which will flow through to everything and shipping delays making it harder and more expensive to import things here in New Zealand. The Reserve Bank will be watching this very carefully as anything that has the potential to skew inflation to the upside will mean a halt to further interest rate cuts. "I suspect markets will open down in anticipation of the conflict, though as we have seen over the past few years, markets fear more about the prospect of conflict rather than the reality of it. We have already seen this playbook with Ukraine and Russia and Gaza and Israel. Definitely no need to worry or panic."
1News
06-06-2025
- Business
- 1News
Call to rethink tax on KiwiSaver
KiwiSaver members could be significantly better off if New Zealand adopted a taxation model similar to Australia's, an economist says. Simplicity chief economist Shamubeel Eaqub ran some numbers modelling a system similar to Australia's, where contributions and returns are taxed at 15%. In New Zealand, full tax is paid on income contributed to KiwiSaver, and returns in PIE schemes taxed at an investor's prescribed investor rate up to 28%. Eaqub said an "average" KiwiSaver investor starting now could end up $60,000 better off in nominal terms at retirement on a model similar to Australia's. If tax was not paid on contributions or returns, they could be about $1 million better off - and if only taxes on returns were removed the gain would be about $300,000. "In Australia, the context is there's some conversation about whether the tax breaks are too generous for richer people. It's not that it's perfect but the point is in other countries it's heavily incentivised for people to save in their private pension." ADVERTISEMENT But it was not in New Zealand. Kirk Hope, chief executive of the Financial Services Council, which represents KiwiSaver providers, said the Australian model was different because that country has a means-tested pension. "The tax break that occurs in New Zealand occurs when you retire, when you get national super... that is the equivalent of about $500,000. So I think it's hard to do a comparative analysis without acknowledging that there are significant differences between the schemes and what they are trying to achieve." Winter's here, supermarket spying, and TikTok's new feature. (Source: 1News) But he said if the tax on savings for New Zealanders was reduced it would give future governments more "fiscal options" in relation to superannuation. He said New Zealand previously had a system that was EET — or exempt, exempt, taxed, where contributions were tax-exempt, exempt from tax within the scheme and then fully taxed when withdrawn. The Tax Working Group in 2018 acknowledged that the change from that system had potentially created incentives for New Zealanders to direct savings into investments like houses instead. ADVERTISEMENT Hope said it would be expensive to adjust back to EET but there could be other changes that would be more affordable. The tax working group estimated that ignoring behavioural changes, it would cost $200m to $300m a year to move to a system where returns and withdrawals were not taxed, and $2.5b a year to move to an EET system. "The higher initial cost for an EET regime arises from the fact that there will be a substantial deferral period before significant amounts are withdrawn from the scheme, and thus taxed under the third 't'. Although these are very different initial costs, the costs will be the same in the long run on a net present value basis." Hope said providing different forms of tax incentives would be beneficial for savers. He said removing or reducing the employer contribution tax would be particularly useful for low-income people. Kernel Wealth founder Dean Anderson said New Zealand was one of the few countries operating a TTE — taxed contributions, taxed returns and exempt withdrawal — model. "Our future savings would be much better off under an EET approach, where we don't pay tax on the way in but on the way out. ADVERTISEMENT "With low savings rates in NZ, the government should be exploring everything in its powers to grow savings rates, which benefits NZ and Kiwis over the long term. "But it's not a surprise. The recent meek KiwiSaver policy announcement did all the hard work to announce a positive gradual increase to KiwiSaver contributions, yet they fell short by announcing a three-year policy rather than outlining a decade plus long policy of incremental KiwiSaver increases." Ana-Marie Lockyer, chief executive at Pie Funds, said KiwiSaver members were at a disadvantage compared to Australians because there was no upfront tax incentive or concession as in Australia to encourage them to contribute more. "Maybe consideration of a mid-tier flat tax rate on savings up to a certain amount would encourage savings." She said employer contributions were also taxed so investors lost the benefits of compounding, and investors paid tax on bonds and deemed dividends on global equities so they were effectively paying a capital gains tax. "So contrary to the government's stated goal of helping New Zealanders' grow their KiwiSaver balances, these factors mean New Zealanders have less incentives to make voluntary contributions and pay more tax on investment earnings, resulting in smaller balances at retirement relative to our Australian friends."
Scoop
25-05-2025
- Business
- Scoop
KiwiSaver Changes To Bolster Next Generation
Press Release – New Zealand Government I want to encourage New Zealanders to find out how our KiwiSaver changes will boost their balance. People should visit the website to see what it means for them,' Finance Minister Nicola Willis says. Minister of Finance Changes to KiwiSaver in Budget 2025 mean young people today will retire with more savings and more financial security, Finance Minister Nicola Willis says. 'Using the Sorted website's comparative calculator, you can see that with the Government's KiwiSaver changes an 18-year-old today earning $48,000 a year, and investing in a balanced fund, will have almost $900,000 in KiwiSaver at age 65. Under the old settings, it would have been about $721,000.' Changes to KiwiSaver in the Budget include extending the government contribution – and employer matching – to working 16 and 17-year-olds, as well as changing the default contribution rate to 3.5 per cent on 1 April 2026 and then to 4 per cent on 1 April 2028. People will have the option to stay on 3 per cent if they choose. 'An increased contribution rate will also grow the funds available to young people for a first home deposit. Kiwis are able to withdraw from their KiwiSaver to purchase a first home, and larger fund balances can only help,' Nicola Willis says. 'An increase in KiwiSaver balances will also grow the pool of funds available for investment in New Zealand. KiwiSaver schemes already invest around 40 per cent of their funds in New Zealand based assets – including housing developments like the Simplicity one we're visiting today. With greater Kiwi savings, more Kiwi projects like this will be possible. 'That's good for the economy, and a strong economy ensures a better future for all New Zealanders – including young people. 'I want to encourage New Zealanders to find out how our KiwiSaver changes will boost their balance. People should visit the website to see what it means for them. It's impressive how a small change in contributions can make a major difference to people's first house deposit or retirement nest egg. 'Since Budget Day, thousands of people have already checked out what the changes mean for them. I urge more people to do so. 'A better life for Kiwis young and old is what it's all about – that's what we're delivering with the Growth Budget – a responsible Budget that secures New Zealand's future.' Notes: The 18-year-old's KiwiSaver example had the following inputs: 18 years old Currently employed Current employer-matched contribution 3 per cent Investing in a balanced fund Salary: $48,000 (annual, paid weekly – slightly less than full time on minimum wage of $23.50 per hour) Result: About $895,104 at age 65. Without Budget 2025 changes it would be $721,176. The figure is not adjusted for inflation, but when it is, savings at retirement remain higher than under previous settings. The calculator's adjustments can be found at Wage growth is assumed at nominal 3.5 per cent growth per annum. Further details about Budget 2025's changes to KiwiSaver can be found here.
