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You may have seen this KiwiSaver conundrum in the media yesterday...
We are constantly seeing people in the wrong tax bracket and portfolio in our KiwiSaver reviews. In the last 25 reviews we have done, only one was in the right tax bracket and portfolio. We are told that the industry figures nationwide are that 90% of New Zealanders are like this. Yes that's nine-oh!
The worse cases that we find are young kiwis signing up with their employer in their first job. They automatically go into a default scheme and in the highest tax bracket. We are told that if you pay too much tax on your KiwiSaver you don't get it back, but if you pay too little tax you will get a bill from the IRD.
Perhaps employers should be taking responsibility here, although there is no legal obligation to do so. The tragedy is, many kiwi's will spend half to all of their working lives in the wrong tax bracket and portfolio, and thus will never be able to reap the full benefits of their KiwiSaver.