Fees and tax
We keep a close eye on the scheme’s costs to make sure they are fair and reasonable. The size of the scheme means we can negotiate competitive rates with our service providers. Fixed costs are spread among many members, which also helps keep the costs per member low. We are not compelled nor do we seek to make a profit.
Scheme fees and costs fall into two categories.
- Management expenses relating to investing the scheme’s assets.
- Expenses associated with operating and administering the scheme.
Investment and administration expenses are set out in the annual financial statements.
Investment management expenses
Investment management expenses include the fees charged in respect of the scheme’s investment in MITNZ and the investment managers it uses to invest the assets of the scheme. Investment management expenses are reflected in the unit price for each investment option.
Investment management expenses vary across options. The fees for Stable, for example, are lower than for Growth. The most significant reason for this is the rate of investment management fees in the underlying sectors that make up each option. For example, investment management fees for international equities are much higher than for bonds or for cash. Growth has the largest allocation to international equities, which is reflected in Growth having the highest investment cost.
See the product disclosure statement for more information about these charges. The latest investment costs for each option are listed below.
|Option||Fund charges per $100 invested (per year)|
|Cash Plus||21 cents|
|Super Steps (age 49)||70 cents|
|Super Steps (age 59)||54 cents|
Administration fees meet the cost of running the scheme. They cover a range of professional services, including secretarial services audit, legal, investment advice, tax and actuarial advice professional directors’ fees and directors’ expenses. See the product disclosure statement for more information about these fees.
Administration fees also cover the cost of providing member services. These include things such as maintaining member and general scheme records, operating the member helpdesk and website and reporting to and communicating with members.
An administration fee is charged monthly based on the amount necessary to cover the cost of running the scheme. The administration fee is paid from your employer’s account if you receive employer contributions or from your member’s account if you don’t. The current fee is up to $5.50 per member per month.
A transaction fee will be debited from your employer’s account (or your member’s account if you are a savings contributor) if you:
- change your investment option(s) more than once in any scheme year (1 April to 31 March)
- request a benefit quote
- are paid a benefit.
This includes leaving benefits, partial withdrawals, significant financial hardship benefits and relationship property settlements. It also includes one-off partial withdrawals made by a retained member.
There is no fee for regular monthly withdrawals by a retained member. There is also no fee in Super Steps when your account balances and contributions are changed automatically on 1 April (from age 45).
If a registered charge is placed on your benefit, a fee will be debited from your member’s account. The annual account statement we send to you each year shows any amounts deducted from your accounts.
Current transaction fees are listed below (last updated 8 January 2019).
|Benefit payment fee||$64.33 per benefit calculation|
|Partial withdrawal fee (applies to active and retained members)||$64.33 per withdrawal|
|Registered charge fee||$32.12 per registered charge|
|First-home withdrawal fee||$200|
|Benefit quotation fee (check your account balance for free at any time by signing in to your account)||$10 per quotation|
|Investment switch fee||First switch each scheme year (1 April to 31 March): free
Subsequent changes: $64.33 per switch
PSS vs KiwiSaver
The return you get from an investment is only one side of the equation. Fees also affect investment performance. As the Morningstar KiwiSaver Report notes, “fees are the one constant that will always eat away at your returns”. Morningstar is an independent company that monitors fund performance, including fees.
Fees for PSS investment options are typically lower than many KiwiSaver funds. These graphs show the total fees for $100,000 invested in the scheme’s three main funds against the average for KiwiSaver schemes with a similar mix of assets included in the Morningstar survey.
Contribution tax is deducted from employer contributions before they are credited to your employer’s account. The tax rate varies depending on the total amount of:
- your taxable income in the prior tax year (or an estimate of your income if you have worked for less than a year)
- employer contributions received during the year.
|Taxable income plus employer contributions||Tax rate (%)|
|Up to $16,800||10.5|
|Between $16,801 and $57,600||17.5|
|Between $57,601 and $84,000||30.0|
|$84,001 and over||33.0|
Tax on investment income
The PSS is a portfolio investment entity (PIE). A PIE is a type of investment vehicle in which investment earnings accruing to an individual investor are taxed at a rate based on the annual income of that investor. This rate is called your prescribed investor rate (PIR). It’s important to use the correct tax rate. You don’t want to pay more tax than you need to. If you do, you can’t get it back from Inland Revenue. On the other hand, if you’re not paying enough tax, you will need to repay the shortfall and may be liable for penalties and interest. For further information, see Inland Revenue’s website.
Use the chart below to work out your PIR.
Taxable income is all of your income that is subject to income tax, including all salary and wages, less any claimable expenses and losses.
PIE income means your share of a PIE’s taxable income. Many superannuation schemes and managed funds have chosen to become PIEs in order to pass on tax advantages for investors on lower incomes.
Call us on 0800 777 243 if you are not certain if something is PIE income.
You will be asked to nominate a PIR when you join the scheme. You can change your PIR if you need to by completing a Confirmation of tax rate (PIR). If you don’t let us know your PIR, your investment earnings will be taxed at the default rate (currently 28%).