The projections and estimates are based on the information you have provided in the tool, together with the assumptions set out below.

Information we have assumed in order to estimate a KiwiSaver balance for you:

1. Tax – We have assumed all clients pay the highest PIE tax rate at 28%.

2. If you select Employed, the tool assumes that your:

• wages or salary will increase each year by 3.5%, and
• employee and employer contributions will be; (i) ongoing, and (ii) will increase in line with your pay, and (iii) 4% unless specified, and
• employer contributions will stop at age 65, and
• employee contributions will continue up to the stated retirement age you have selected.

3. If you select ongoing voluntary contributions, the tool assumes that these will:

• increase each year (from the value you select) based on the inflation rate of 2%, and
• stop at the stated retirement age you have entered.

4. Inflation – The assumed annual rate of inflation is 2%, which is the midpoint of the Governments inflation target of keeping between 1% and 3% over the medium term.

How we use inflation in the tool:

• We apply a 2% inflation rate to any voluntary contributions or withdrawals you make. This helps us estimate what those amounts will look like in the future, because prices and money values change over time.
• We also apply a 2% inflation rate to adjust the estimated yearly values of the projection, so they show in today’s dollars. This way, the projection shows what your investment would be worth in today’s terms, giving you a clearer and more realistic picture.

5. Government contribution – Our tool assumes you are eligible for the full government contribution, that this will continue until age 65, to a maximum of $260.72 per annum and you do not take savings suspensions. For those earning more than $180,000 p.a. this assumption means that your results will be overstated by the Government contribution and any returns on it.

6. Life expectancy – We have calculated your life expectancy age based on the 2017-2019 life expectancy tables produced by Statistics New Zealand.

7. New Zealand superannuation payments (super payments) – These will be excluded unless you opt to include them. If you do include them, these super payments:

• only begin from the retirement age you have selected on the tool, and
• are only considered as an offset for how much you would be withdrawing from your KiwiSaver. Example: You select an annual withdrawal of $43,000 and opt to include super payments (which is ~$28,000) then the overall amount that the tool assumes you will actually withdraw from your KiwiSaver balance, is ~$15,000.

8. Rebalancing at retirement –
(a) If your recommended fund is the Milford KiwiSaver Active Growth Fund or Milford KiwiSaver Aggressive Fund, the tool will automatically switch to the Milford KiwiSaver Balanced Fund at the end of your selected retirement age (your chosen retirement age + 364 days).

What this means for you:

• After retirement, your projected balances and annual drawdown amounts will be based on the assumed return of the Milford KiwiSaver Balanced Fund.
• We do this to provide a more cautious estimate of your retirement balance (since this may affect your withdrawal decisions) and to reflect the typical shift to lower-risk investments during retirement.

Transition period:

The first 364 days after your selected retirement age are treated as a transition phase. During this time, returns are calculated using the Milford KiwiSaver Active Growth or Milford KiwiSaver Aggressive Fund rate (if one of these is your recommended fund), with KiwiSaver withdrawals and super payments accounted for at the end of the period and excluded from the return calculation. This approach may slightly overstate returns for your first year of retirement, and the difference can grow over time due to compounding.

(b) If your recommended fund is the Milford KiwiSaver Balanced Fund, Milford KiwiSaver Moderate Fund, Milford KiwiSaver Conservative Fund or Milford KiwiSaver Cash Fund, the projected balances and annual draw down amounts will be calculated using your recommended fund’s assumed returns pre and post retirement.

Note: assumed fund returns used in the tool differ to your KiwiSaver Annual Member Statement. The returns used in your KiwiSaver Annual Member Statement, use a set of Government mandated assumptions. The return assumptions used in this tool are higher than the Government mandated return assumptions. The assumed returns in the tool are intended to provide you with a more realistic estimate of what we think the Milford KiwiSaver Fund returns might be, based on our investment expertise and the track record of our funds’ past performance, albeit past performance is no guarantee of future returns. This also means that the tool’s estimate of your KiwiSaver balance when you reach 65 is highly likely to differ from the estimate set out in your KiwiSaver Annual Member Statement which is required to use the Government assumptions which may have fewer variables and use different return assumptions.

Other important points you need to know:

• The tool will only ever give you ballpark figures. The estimated future balances and projected amounts you could spend each year in retirement will give you a general idea to help you plan for your retirement. They are estimates in nature only and will vary (sometimes greatly) depending on market performance and other factors.
• Projection:
  • • The projection displayed is illustrative only. In reality, there will be market volatility. Actual market conditions are unpredictable and subject to frequent and sometimes sharp fluctuations
    • The projection starts from your next birthday. (i.e. your current age +1)
• The assumed fund returns in this tool have been prepared by an independent actuarial firm, EriksensGlobal and validated by Milford. They should not be used to compare Milford KiwiSaver fund projections with other KiwiSaver scheme providers.
• For a first home withdrawal, a minimum of $1,000 is needed to be left in the account to be considered ‘on track’.