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NZ’s first Guaranteed Income KiwiSaver Fund starting to fly


After 18 months of ‘bedding down’, Simplicity's Guaranteed Income Fund is standing strong. 

The fund, which guarantees members a minimum income of at least 5.00% per annum, after tax and fees, from age 65 for life was launched in September 2017.

It's a first for KiwiSaver and offers welcome choice to older New Zealanders.

Members of Simplicity KiwiSaver Scheme invested in the Guaranteed Income Fund receive a fortnightly income on the same day as their New Zealand Superannuation. The drawings (after fees and tax) will come from their KiwiSaver Scheme which is structured like a balanced fund.

Simplicity's managing director, Sam Stubbs, says after 18 months in the Simplicity nest, the fund has found its feet.

“We always spend a few months bedding down products. We’ve still got relatively few members but so far performance is going very well in that we’re currently seeing just over 7% return. So members who have put their money in are getting their guaranteed 5% plus a little bit extra.” 

Stubbs says the Guaranteed Income Fund (GIF) model is vital to the future of retirement in New Zealand.

“It’s very clear that there is a wealth gap between Super and what a reasonable person needs in retirement. Under no circumstances is Super enough unless you are super wealthy. So for anyone who wants a regular guaranteed income to meet their needs in retirement this product is really important. To know that it’s guaranteed for the rest of your life provides huge peace of mind. Even if your capital goes to zero, you’ll still receive the same income.”

Sounds too good to be true?

“It is true, and it’s been true for 18 months now. 75 years ago Southern Cross seemed too good to be true too. This is no different.

The fund is regulated by the Financial Markets Authority and the Reserve Bank and nobody touches the money but the Public Trust. And it’s run by us, a non-profit owned by a charity. 

The problem with Financial Services in New Zealand is that there haven’t been any income products that you can rely on for your lifetime. Term deposits are fairly short term and long term deposits are at punitive rates. This GIF is very common overseas, and our desire to get involved is because no one else is doing it in relation to KiwiSaver funds.”

But Stubbs hopes other KiwiSaver providers will follow Simplicity’s lead.

“This is new and different and Kiwis aren’t used to it. The more players in the market they more comfortable consumers will be. The reliability of Super is what people love about it, they know it’s there. This Guaranteed Income Fund simply adds to that.”

The fund is invested in a balanced portfolio of 3,000 investments in 23 countries; 55% is invested in investment grade bonds and 45% in local and international shares. Investments are managed by Simplicity as well as Vanguard, the world’s second largest asset manager.

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. 

“We want people to know that we are a financial services company that is looking after them, not just shareholders. We make money for members, not from members and we charge what it costs to produce, no more. We’re in the business of maximising New Zealanders’ wealth, that’s what we’re about.”





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