MONEY MATTERS by Britannia November 2018 – Download the PDF Download Pdf

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Keeping steady on shaky ground (Members of the Britannia Retirement Scheme)

Since early October markets have become more volatile, with good and bad news battling it out. Investing for retirement means you’re in it for the long run – life expectancy for a 65-year-old is around 20 years and that’s a lot of good times, new challenges and unexpected events that need to be funded. One of the key requirements for good long-term investment is diversification, and ensuring all funds are well diversified across geographies, industries and individual companies.

Over the year to 30 September 2018, the funds in the Britannia Retirement Scheme have performed well.  We measure our (post fees) performance against our peers and over that year, the main four funds have performed as follows:

 Fund Ranking   Peer group - from the MJW (*) Investment Survey
 Moderate
 1st of 8  Moderate KiwiSaver Funds
 Lifetime Income  2nd of 8 (**)  Moderate KiwiSaver Funds
 Balanced
 3rd of 11  Balanced KiwiSaver Funds
 Growth
 4th of 13  Growth KiwiSaver Funds

(*) MJW (“Melville Jessop Weaver”) is an independent firm of consulting actuaries which provides investment consulting services across New Zealand.  The June survey can be found at:


(**) excluding the insurance fees of the Lifetime Income Fund to make the peer group more comparable.  Including this fee the fund ranked 3rd of 8.

Remember that you can check your balance anytime by visiting britanniafinancial.co.nz and clicking on the ‘Current Members’ page, then selecting the appropriate Scheme. If you have any questions feel free to contact your adviser or Britannia on 0800 500 811. 

Thank you for trusting Britannia to take care of your retirement savings.
 


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Keeping steady on shaky ground (Members of the Britannia Superannuation Scheme and the Britannia Superannuation Scheme 2012)

Since early October markets have become more volatile, with good and bad news battling it out. Investing for retirement means you’re in it for the long run – life expectancy for a 65-year-old is around 20 years and that’s a lot of good times, new challenges and unexpected events that need to be funded. One of the key requirements for good long term investment is diversification, and ensuring all funds are well diversified across geographies, industries and individual companies.

Over the year to 30 September 2018, the funds in the Britannia Superannuation Scheme and the Britannia Superannuation Scheme 2012 have performed well. We measure our (post fees) performance against our peers and over that year, the main three funds have performed as follows:

 Fund Ranking   Peer group - from the MJW (*) Investment Survey
 Moderate
 1st of 7  Moderate KiwiSaver Funds
 Balanced
 3rd of 11  Balanced KiwiSaver Funds
 Global Equities
1st of 13  Growth KiwiSaver Funds

(*) MJW (“Melville Jessop Weaver”) is an independent firm of consulting actuaries which provides investment consulting services across New Zealand.  The June survey can be found at:


Remember that you can check your balance anytime by visiting britanniafinancial.co.nz and clicking on the ‘Current Members’ page and selecting the appropriate Scheme. If you have any questions feel free to contact your adviser or Britannia on 0800 500 811.

Thank you for trusting Britannia to take care of your retirement savings.
 



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Giving loved ones the gift of a will

Just about everything in life is more fun than thinking about what happens when we die, or become incapable of making choices about ourselves and the things we own. So, it was no surprise that when asked to write a piece for our newsletter on wills and enduring powers of attorney even paying bills seemed like a great diversion from getting underway with this piece… but please read on as it’s important.  

Why is this topic so hard to think about and deal with?

The answer is simple, none of us want to confront death or, often worse, become incapacitated.  None of us want to say goodbye to our loved ones or leave them in the lurch. Instead, most of us want our loved ones to remember us at our finest and to not cause them any issues when we’re gone.

Despite being extremely confronting, one of the greatest gifts we can provide the people we care about is making sure their lives can go on as smoothly as possible even when we have gone or can no longer make our own decisions. Doing as much as you can now for those you love isn’t difficult or expensive. 

It simply means making a will and putting in place an enduring power of attorney.

Not doing this can create an administrative nightmare for those we leave behind. Unless you have a will significantly longer and more complicated administration processes can make day to day living difficult for those you care about. Worse still, your things may not even go to the people you want!

These issues become even more complicated for UK expats who were born or have assets in the UK (or other countries) but die here in New Zealand.  Unless you have a will which directs how all your property is to be distributed (wherever located) the whole process can become difficult, costly, slow and painful.

So although mundane, it's really important that:
  • If you don't have a will and enduring power of attorney, make an appointment with your solicitor or if you don’t have or know one, your Britannia adviser can point you in the right direction.
  • If you already have a will and enduring power of attorney well done!  However, things change so you should review it every few years (or following significant life events) to make sure they still convey your wishes now.
Your Britannia adviser is also a good first port of call if you need help getting started. Remember none of us know when our last day will be or when an event might occur that changes our ability to live as we expect so let’s all get this done so we can get on with living!
 


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Remember Emma? She’s loving the Kiwi lifestyle

Just over a year ago we introduced you to Emma Johnson, a UK migrant who moved to New Zealand immediately after winning flights in a Britannia competition. The ball was already rolling for Emma in terms of her move but as she said at the time “Winning the competition was fate – it proved to me that it was meant to be!”

When we first spoke to Emma it was early days for her in NZ but she was extremely positive about the move. We’re so pleased to hear that things have continued to go well for her, including a move from Tauranga to Wellington after meeting her new partner Shane.

We asked Emma a few questions about her life in NZ: 

How is life treating you in NZ since we last spoke?
Life is still amazing here in NZ, it’s been nearly 16 months since I arrived, I changed areas where I live from Tauranga to Wellington - but only for love!

What are you enjoying most about NZ? 
NZ is laidback, has an easygoing lifestyle and definitely is a destination where lifestyle comes before work.

What do you still miss from the UK?
Not very much apart from my family and friends, but FaceTime makes it so easy to stay in touch, oh and tasty cheese!

What prompted your recent decision to transfer your pension to NZ?
I partly made the decision due to the tax-free time period (4 years) you have of transferring funds from the UK and have made the decision this is where I want to stay.

What advice would you give others thinking about making the move to NZ?
Visit NZ, go to emigration seminars, join groups on social media and ask questions as everyone already here is happy to assist with queries or worries that you may have.

Have you met many other Brits in NZ?
I’ve met a number of Brits here in New Zealand – you do come across a lot of them! Everyone loves it here and would never go back. They have all said that whenever they revisit the UK, they know they have made the right move. I am travelling back to the UK in May 2019 so it will be a couple of years since last seeing my family and friends, however this is the only reason I’m planning on going back for a holiday.

Any other comments?
I often think NZ is like the UK used to be about 10-15 years ago in some respects, and I think this is one of the nice things about living here. Everything is so laid back and you don’t feel as if you have to keep up with the Jones’, which is often what many parts of the UK are like. Kiwis are super friendly and everyone makes you feel so welcome, I’ve experienced this both in my work life and private life so far.


If you know anyone who has recently made the move to NZ from the UK we’d love to hear from them. Tell them to mention your name and if they end up transferring their pension we’ll give you $250 as a thank you!

Give us a call on 0800 500 811 or email us at team@britanniafinancial.co.nz
 



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The fallacy of downsizing

Many Kiwis need other ways to fund retirement apart from selling the family home.

It’s supposed to be the comfortable cushion for baby boomers, and many approaching retirement sell the family home and downsize.

But recent research shows that, for many people, downsizing may only “buy” three years of comfortable retirement living.

With property values having rocketed up in recent years, it has always sounded like a good scheme – but now financial services experts have warned that downsizing, on average, is not always the key to the door of a comfortable retirement. 

With a retirement age of 65 but people increasingly living, on average, to 82 or beyond, downsizing is by no means definitive, says Richard Klipin, CEO of the Financial Services Council (FSC).

Their research showed that enhanced life expectancy can also mean even those who have planned for their retirement can run out of money after 10 years – and live the rest of their lives with only the national super as income.

“Thankfully, in New Zealand, we do have a system which keeps the wolf from the door for most people,” says Klipin. “But it is not a generous lifestyle and many people can end up in a [financial] place they don’t want to be.” 

Research was undertaken last year to estimate the total wealth New Zealanders expect to take into retirement and whether they are overestimating or underestimating their financial wellbeing after stopping paid work.

“What we found, when we surveyed 2200 people, was that the average outcome for people downsizing their homes was that it only gave them 3.3 years. Most will either be moving to a retirement home or to a smaller house – so they will be using some of that property value to re-enter the market [incurring real estate and legal costs on both transactions],” says Klipin. 

“We also found nearly all older New Zealanders will be living on the pension alone after just 10 years – indicating more education is needed on investment options available during people’s lives. About 40 per cent of the elderly we surveyed regretted not having more financial advice.”

So what would they be advised to do? Older people still working need to make the most of opportunities to grow a nest egg and increase income in retirement.

“People tend to cash up, go on a holiday, buy a car and update the white goods – and then they say: ‘Right, we’re ready for retirement’.”

Unfortunately, many aren’t. With KiwiSaver, New Zealand is developing an accumulation culture, says Klipin, but there has been little in the way of “decumulation planning” – where retirees receive a regular income over and above the pension.

“So as the number of over-65s in KiwiSaver grows,” says Klipin, “they will expect the financial services industry to provide more advice on re-investing savings and funds raised from downsizing.”

One potential tool is life income funds, a comparatively new financial product here. They use retirees’ capital to provide a regular income – for life, using a mix of investment and insurance.  The money is invested and a fixed sum paid out to the retiree at regular intervals. An insurance premium paid from their life income fund ensures that, should the retiree run out of capital before they die, they will continue to receive the regular income for the rest of their lives - paid out of insurance. Any capital left when the person dies is paid into the estate.

Klipin says: “It helps to answer the great existential question: How long will you need funds for? I mean, who knows their date of death?”

Life income funds can provide certainty for retirees, but he says they still need to check that any such product gives them that financial longevity, whether it is subject to interest rate shifts and is not inflation-proofed, and to ensure any capital left after death reverts to the estate.

But such funds can assist many who, in the FSC research, were over 65 and retired and thought they needed $655 a week, after tax, to live comfortably – but who were only receiving $437 a week, a shortfall of $218.

“Of course, there is a cohort of New Zealanders who have invested wisely or sold a business or otherwise provided for their retirement,” he says. 

“Some are doing very well – but our research showed that will not be so for many.”

If you’d like to find out more about Britannia’s Lifetime Income Fund which combines investment with insurance to give you a retirement income for life, get in touch today. You can call us on 0800 500 811 or email us at team@britanniafinancial.co.nz. Or check out our website at https://britanniafinancial.co.nz/lifetime-income-fund
 




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