Glossary

Use our glossary of investments and KiwiSaver terms to find out what that unfamiliar word means below.

A

Administration manager

Someone who carries out administration work for an investment scheme like the ASB KiwiSaver Scheme. This includes things like the administration of your KiwiSaver account, preparing the Prospectus, the Investment Statement and Annual Reports.

Annual Report

A report that's sent out each year to let you know how a company or managed fund (or in this case the ASB KiwiSaver Scheme) is performing.

Assets

Any item of value that can be represented on a balance sheet and sold for cash.

Auditor

The person (or group of people) who takes a thorough look at the numbers and makes sure that the accounts comply with International Financial Reporting Standards (IFRS) and show a true and fair view.

C

Back to top

Capital gain

This is the increase in value of your investment. For example if you buy a share for $2 and sell it for $3, you've had a $1 capital gain.

Cash

Investment solely in cash investments (e.g. cash balances with banks and securities which are, or are to be included, in the ANZ 90 Day Bank Bill Index). Cash is a low risk investment that aims to provide consistent returns. Cash is suitable for short term investments as part of an overall investment portfolio to balance higher risk investments.

The Commissioner

The commissioner of Inland Revenue.

Complying superannuation fund

A superannuation fund that is approved as a complying superannuation fund by the Government Actuary. Put simply it is a registered superannuation scheme that has essentially equivalent rules to KiwiSaver.

D

Back to top

Default KiwiSaver Scheme

The Government has appointed six default providers to offer KiwiSaver schemes for people who don't choose their own scheme and whose employer does not have a chosen scheme. The ASB KiwiSaver Scheme is one of the six default KiwiSaver schemes.

Diversifying

The process of spreading investments out over a number of different investments or asset types so that changes in value in one area will have less effect on the overall portfolio.

E

Back to top

Employee contribution

The amount you contribute to KiwiSaver – usually either 2%, 4% or 8% of your pre-tax salary or wages. The Government announced in the 2011 Budget that the minimum employee contribution rate and the default contribution rate will increase from 2% to 3% of gross salary or wages with effect from 1 April 2013.

Employer contribution

The amount your employer contributes to KiwiSaver when you are also contributing to KiwiSaver and are eligible for employer contributions. See Benefits for more details on the amounts and eligibility. The Government announced in the 2011 Budget that the compulsory employer contribution rate will increase from 2% to 3% of gross salary or wages with effect from 1 April 2013.

F

Back to top

Fixed interest

Fixed interest is a lower risk income asset class that primarily generates a regular income and offers steady returns over time. Examples are Government and corporate bonds. Most ASB KiwiSaver Scheme Investment Funds invest in fixed interest and these are separated into two types:

NZ fixed interest

Investment in New Zealand Government and corporate bonds.

World fixed interest

Investment in Government bonds markets around the world.

G

Back to top

Government kick-start contribution

When you first join a KiwiSaver scheme, the Government pays a $1,000 tax-free payment to your KiwiSaver savings. This is paid approximately three months after you first join KiwiSaver.

Growth assets

Assets such as shares and property which move up and down in value more frequently than income assets but are generally expected to provide higher investment returns over the long-term.

I

Back to top

Income assets

Assets that generally provide a fixed income and include bonds, bank bills, debentures and cash. These investments are generally considered to be less risky than growth assets.

Index-tracking (passive) fund

An index-tracking fund (or passive fund) is a type of fund that is designed to mirror the return of the market in which they are invested. All ASB KiwiSaver Scheme Investment Funds are index-tracking funds. The opposite of an index-tracking fund is an active fund, where a fund manager buys and sells selected shares to try and obtain a return higher than the market return.

International Financial Reporting Standards (IFRS)

Widely used accounting standards that are intended to give a true and fair view of things.

Investment statement

The document you are given when you are considering joining the ASB KiwiSaver Scheme. It sets out important information such as how the ASB KiwiSaver Scheme works, what will happen if you join, the providers of the ASB KiwiSaver Scheme, charges, how much you have to pay, returns and risks.

K

Back to top

KiwiSaver retirement benefit

Your KiwiSaver retirement benefit is the total amount of your savings that you will be able to withdraw at the later of when you become eligible for New Zealand Superannuation (currently age 65) or after five years membership in KiwiSaver (including any time in a complying superannuation fund).

KiwiSaver scheme

A managed fund that meets the Government regulations for a KiwiSaver scheme.

KiwiSaver provider

An organisation that provides a KiwiSaver scheme to New Zealanders.

M

Back to top

Managed fund

A managed fund is a pool of money from many investors that is invested (managed) by specialist fund managers. Because the total amount of money available from all investors is greater than what a single investor would usually have available to invest, managed funds can often invest in more areas than a single investor would have access to. All KiwiSaver schemes are managed funds.

Member Tax Credits

For the KiwiSaver year 1 July 2011 to 30 June 2012 onwards, the Government's member tax credit rate is dropping from $1.00 for every $1.00 you contribute up to a maximum of $1,042.86 per annum, to $0.50c for every $1.00 you contribute up to a maximum of $521.43 per annum (subject to eligibility).

Market correction

A turn around in the prevailing market trend, for example when the market usually goes up but then goes down for a while. This can often be caused by values being considered too high or too low.

Market value

The amount that the market is prepared to pay for something. This could be a share's last reported sale price (if on an exchange) or the price as determined by buyers and sellers in an open market - like a house auction.

P

Back to top

Portfolio Investment Entity (PIE)

A PIE is a tax status given to a managed fund. The ASB KiwiSaver Scheme is a PIE. It essentially means that the tax payable on your share of the ASB KiwiSaver Scheme investment income will be calculated based on your PIR (Prescribed Investor Rate). Your KiwiSaver provider will pay all tax on your ASB KiwiSaver Scheme investment income for you and you will not have to declare the income in your tax return unless the PIR held by your KiwiSaver provider was lower than it should have been.

Prescribed Investor Rate (PIR)

Your Prescribed Investor Rate will be 10.5%, 17.5% or 28% and is based on your income levels over the last two years. It is used to calculate the tax paid on your investment income from a PIE. To work out your PIR go to www.asb.co.nz/pir

Property

Property is a higher risk growth asset class that has the potential to increase and decrease in value over the longer term and is generally expected to deliver higher returns to investors in the long term. Some ASB KiwiSaver Scheme Investment Funds include an investment in Global Property, which includes investment in listed global commercial, industrial and retail property.

Prospectus

The document that sets out detailed information about how the ASB KiwiSaver Scheme works and is registered with the Registrar of Financial Service Providers. The ASB KiwiSaver Scheme Prospectus is available free of charge from www.business.govt.nz/companies under "Search other Registers" or by phoning us on 0800 ASB RETIRE (0800 272 738).

R

Back to top

Return / rate of return

The rate of return on an investment is dependent on a number of things, including the type of assets your KiwiSaver scheme is invested in, general market conditions and the rise and fall in value of the assets in which your KiwiSaver savings are invested. There are short-term performance figures available for the ASB KiwiSaver Scheme, however it is important that you are made aware that historical performance and forecasts of future performance are not a guarantee of how an investment fund will actually perform. As an investor, you may experience short-term losses at times, but you should look to choose an investment fund that best suits your needs for reaching your retirement savings goal.

S

Back to top

Securities

A term used to describe shares, bonds and other things that signify an interest in earnings or assets.

Shares

Shares are a higher risk growth asset class that have the potential to increase and decrease in capital value and are generally expected to deliver higher returns to investors in the long term. Some ASB KiwiSaver Scheme Investment Funds invest in shares and these are separated into two types:

Australasian shares

Investment in the New Zealand and Australian share markets.

World shares

Investment in international share markets and organisations.

Statutory information

Information that we are legally required to tell all ASB KiwiSaver Scheme members.

Summary financial reports

A written report including high-level numbers that gives an idea of the financial health of the ASB KiwiSaver Scheme. They show information such as the income, expenses, amounts invested and withdrawn and the assets and liabilities of the ASB KiwiSaver Scheme.

T

Back to top

Trust Deed

The document that established and governs the ASB KiwiSaver Scheme.

Trustee

The organisation that is trusted with keeping an eye on the ASB KiwiSaver Scheme to make sure that everything is being managed in the way it should be. The Trustee makes all trust related decisions with members' best interests in mind. Public Trust is the Trustee of the ASB KiwiSaver Scheme.

U

Back to top

Unit

When you make contributions to KiwiSaver, these contributions buy units in your KiwiSaver scheme. A unit is a small part of the fund (in your KiwiSaver scheme) that indicates a share of the whole fund. These units rise and fall in value over time. Your total number of units times the unit value indicates the current value of your KiwiSaver savings.

Unqualified audit report

An auditor's report issued when the auditor has no reservations concerning the financial statements reported.