Simplicity claims its new KiwiSaver fund will guarantee retirees income for life
KiwiSaver provider Simplicity has launched a new fund that it claims will guarantee its members a minimum income of at least 5% per annum, after tax and fees, for the rest of their lives.
From age 65 on, Simplicity members invested in the Guaranteed Income Fund will be able to receive a fortnightly income on the same day as New Zealand Superannuation.
If the value of a member’s investment in the fund falls to zero, an insurance policy guarantees them the same income payments for the rest of their life. The insurance policy is provided by Lifetime Retirement Income, a licensed insurer regulated by the Reserve Bank of New Zealand.
The drawings (after fees and tax) will come from their KiwiSaver Scheme which is structured like a balanced funds. These payments are designed to top up the money retirees get from New Zealand Superannuation, in order to help them meet their regular living expenses.
Payments are guaranteed for as long as the investor lives, regardless of what happens to investment markets or interest rates during their retirement. To be eligible, members must have been in KiwiSaver for a minimum of five years.
Simplicity Founder and Managing Director Sam Stubbs said the new fund provided “welcome choice for older New Zealanders”.
"Too often retirees have to choose between very low term deposit rates with break fees, or overly risky investments. They deserve better," Stubbs said.
Nothing is locked in, and there are no exit or break fees. Members have full access to their money at any time, and the fund balance is paid to their estate if they pass away, he said.
Market movements and income payments will change the value of a member’s investment in the fund, but the income payments always remain the same, and are guaranteed for the entirety of a member’s life. The Fund can also guarantee members’ income before they retire, protecting it from any market downturns.
Simplicity’s guaranteed income rates increase with age, starting at 5% per annum if a member starts at age 65, increasing by 0.10% each year thereafter.
For example, a member would get 5% if they started getting their guaranteed income at age 65, rising to 7.5% for those who started at age 90. A single rate is guaranteed for life.
The minimum investment is $50,000 and applicants can switch into the fund from aged 60 onwards.
Currently, people aged 65 and over cannot become new members of any KiwiSaver scheme, however that restriction is currently under review.
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Demand for KiwiSaver improvements
KiwiSaver increases inequality, says group
From age 65 on, Simplicity members invested in the Guaranteed Income Fund will be able to receive a fortnightly income on the same day as New Zealand Superannuation.
If the value of a member’s investment in the fund falls to zero, an insurance policy guarantees them the same income payments for the rest of their life. The insurance policy is provided by Lifetime Retirement Income, a licensed insurer regulated by the Reserve Bank of New Zealand.
The drawings (after fees and tax) will come from their KiwiSaver Scheme which is structured like a balanced funds. These payments are designed to top up the money retirees get from New Zealand Superannuation, in order to help them meet their regular living expenses.
Payments are guaranteed for as long as the investor lives, regardless of what happens to investment markets or interest rates during their retirement. To be eligible, members must have been in KiwiSaver for a minimum of five years.
Simplicity Founder and Managing Director Sam Stubbs said the new fund provided “welcome choice for older New Zealanders”.
"Too often retirees have to choose between very low term deposit rates with break fees, or overly risky investments. They deserve better," Stubbs said.
Nothing is locked in, and there are no exit or break fees. Members have full access to their money at any time, and the fund balance is paid to their estate if they pass away, he said.
Market movements and income payments will change the value of a member’s investment in the fund, but the income payments always remain the same, and are guaranteed for the entirety of a member’s life. The Fund can also guarantee members’ income before they retire, protecting it from any market downturns.
Simplicity’s guaranteed income rates increase with age, starting at 5% per annum if a member starts at age 65, increasing by 0.10% each year thereafter.
For example, a member would get 5% if they started getting their guaranteed income at age 65, rising to 7.5% for those who started at age 90. A single rate is guaranteed for life.
The minimum investment is $50,000 and applicants can switch into the fund from aged 60 onwards.
Currently, people aged 65 and over cannot become new members of any KiwiSaver scheme, however that restriction is currently under review.
Related stories:
Demand for KiwiSaver improvements
KiwiSaver increases inequality, says group
