Author: Michelle Hayton

More companies are looking to enhance their benefit offering this year, despite cost constraints, according to new research. Gallagher found eight out of 10 employers who are planning changes to their benefits package are looking to enhance their benefits package This is an increase from the 70 per cent looking to upgrade services last year.

Of those planning changes, only 5.2 per cent are looking to remove benefits, which the consultant says shows the value of a clear benefits strategy, particularly when it comes to recruitment and retention in a difficult employment market.

The research also showed that 23.5 per cent of firms are going to change their benefit delivery method, with the same percentage looking to switch their benefits provider.

The research, part of Gallagher’s fifth benefit strategy and benchmarking survey report, looked at the challenges facing businesses when it comes to delivering a successful benefits strategy. The research found the biggest challenge cited by businesses was to ensure their benefits offering appealed to a diverse workforce that will have very different needs and preferences.

Other major concerns included increasing the cost of benefits within a tight budget and challenges around the communication of benefit packages.

Last year costs and budget were seen as the biggest challenge, so this is the first time the issues around diversity have now superseded this to become the number one concern.

The research revealed that the majority of employers haven’t implemented policies needed to support women in the workplace experiencing menopause – with only one in five firms with formal policies in place. Where support for women during menopause exists, the type of help being offered ranges from flexible working policies (61.5 per cent), employee forums/support groups (53.8 per cent) and training for managers (42.3 per cent).

Gallagher’s data shows 73 per cent of organisations are looking to improve internal communication – but as many as two-thirds (68.6 per cent) do not have a pre-defined benefits communication budget. Among those surveyed with a communication budget, most allocated less than £10,000 per year. The use of a discount portal is one of the top (33.9 per cent) methods used to communicate, followed by 17 per cent using mental health/well-being apps.

Steve Threader, managing director of reward and benefit consulting at Gallagher’s Benefits and HR Consulting Division in the UK, says: “The connection between employee wellbeing and organisational wellbeing has become more significant. It’s encouraging to see that the desire to create flexibility is trending across the country, with 47.8 per cent of employers wanting to improve it in order to extend individual choice and to better support those who need it the most.”

by Emma Simon, Corporate Adviser – November 29, 2022

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Our global population is getting older. By 2050, the OECD predicts that 30% of people worldwide will be aged 65 or over.

While some countries are relatively prepared to handle this increase in the elderly demographic, others are already feeling the squeeze and struggling with the challenges that come with a rapidly aging population.

Which countries are the best equipped to support their senior citizens? This graphic uses data from the 2022 Natixis Global Retirement Index to show the best countries to retire in around the world based on several different factors that we’ll dig into below.

What Makes a Country Retirement-Friendly?
When people consider what makes a place an ideal retirement location, it’s natural to think about white sand beaches, hot climates, and endless sunny days. And in truth, the right net worth opens up a world of opportunities to enjoy one’s golden years.

The Global Retirement Index (GRI) examines retirement from different, more quantitative perspective. The annual report looks at 44 different countries and ranks them based on their retirement security. The index considers 18 factors, which are grouped into four overarching categories:

• Health: Health spend per capita, life expectancy, and non-insured health spend.
• Quality of Life: Happiness levels, water and sanitation, air quality, other environmental factors, and biodiversity/habitat.
• Material Wellbeing: Income per capita, income equality, and employment levels.
• Finances in Retirement: Government debt, old-age dependency, interest rates, inflation, governance, tax pressure, and bank non-performing loans.

Using these 18 metrics, a score from 0.01 to 1 is determined for each country, which is then converted to a percentage. For a more detailed explanation of the report’s methodology, explore Appendix A (page 72) of the report.

The Top 25 Best Countries to Retire in
With an overall score of 81%, Norway ranks number one as the most retirement-friendly country on the list.

Norway is at the top of this year’s ranking for several reasons. For starters, it achieved the highest score in the Health category, mainly because of its high average life expectancy, which is 83 years old, or nine years longer than the global average.
Norway also has the highest score of all the countries for Governance, a category gauged by assessing country corruption levels, political stability, and government effectiveness, and is in a three-way tie with Japan and Luxembourg in the Health category.
Second on the list is another European country, Switzerland, with an overall score of 80%. It’s the highest-ranked country for environmental factors and has the highest overall score in the Finances in Retirement category.

By Raul Amoros, Ranked: The Best Countries to Retire In; Published on November 21, 2022 https://www.visualcapitalist.com/best-countries-to-retire-in-2022

Source: Devon Funds Management, Morning Note 01/08/2022

Stock markets rose again on Friday, capping off July’s massive rebound, which has brought relief to investors following the worst start to a year in over five decades. The S&P500 rose 1% on Friday for a 9.1% rise last month, the biggest monthly gain since November 2020. It was the best July for the broader index since 1939.

The tech-laden Nasdaq did even better with a gain of 12% in July, the strongest monthly gain since April 2020. Strong earnings from tech titans Amazon and Apple boosted sentiment on Friday. Amazon shares rallied 10% and finished up a somewhat incredible 27% in July (although they are still down 20% year to date).

The market’s incredible performance in July has the hallmarks of a reset by investors after a lot of bad news had been priced in. Concerns around inflation, interest rates and the economy remain, but the worst-case outcomes have yet to play out, and the future may also not be as bad as feared. Inflation could be peaking while softening patches in the economy have seen the Federal Reserve pivot to a more dovish stance.

The world’s largest economy contracted for the second quarter in a row, but to paraphrase Star Trek, “it’s a recession but not as we know it, Jim.” An obvious difference from a usual recession is a strong jobs market and an economy which created nearly 400,000 jobs last month. Consumers, while being more ‘choosy,’ are also still outspending on a variety of products and services, as highlighted by the current US earnings season.

On that note, the reporting season continues to deliver many more positives than negatives. Over 70% of S&P500 companies that have reported to date have beaten earnings expectations.

On Friday, Amazon beat quarterly revenue and earnings forecasts and gave an upbeat outlook for the rest of the year. Revenues rose 7% to US$121b, with the cloud computing business doing particularly well. Amazon was a massive pandemic beneficiary, but post the peak consumer spending boom; the company was left with excess warehousing and overstaffing. Investors were buoyed that the company is cutting back on costs, even while overall revenues are still inching higher. Amazon made a loss during the quarter (mainly due to an investment in EV maker Rivian) but expects operating income to be as much as US$3.5 billion in the current quarter.

There was a similarly upbeat update from Apple. The company saw revenues rise 2% to US$83 billion during the quarter, nearly half of which was iPhone sales. The company had warned that supply chain constraints would have a US$4 to $US$8 billion impact during the quarter, and in the end, it was less than US$4 billion. This was music to the ears of investors. On that note, Apple Music saw sales surge 12% to US$19.6 billion. Apple is also cutting costs, but customers are out there spending strongly on the company’s products and services, further contradicting the idea that we are in recession.

There continue to be some earnings misses to temper enthusiasm from getting overblown. Intel shares fell 8.6% after the company reported quarterly revenue of US$15.3 billion, which was well short of the US$17.9 billion expected. Earnings per share of 29 cents were well short of the 70 cents expected. It was the company’s largest top-line disappointment since 1999, with the semiconductor maker wearing the impacts of slower computer purchasing by corporates. The company lowered full-year guidance but provided a ray of light, with executives saying the chip-maker was “on the bottom.” The only way may be up, with Intel also putting through price increases.

The European economy is already off the bottom, it seems. Preliminary figures from Eurostat showed GDP grew 0.7% quarter on quarter in June when a tepid gain of 0.1% had been expected. While Germany lagged, Spain and Italy saw growth of 1%, while the French economy grew in the quarter when a contraction had been expected. An influx of tourists post lockdowns has also provided a boost to the Eurozone.

The Euro economy is dealing with challenges still (inflation has hit 8.9%), but like many places, a lot of bad news has been priced in. The Stoxx50 in Europe also had a strong month, rallying 7.6%. The FTSE100 in the UK added nearly 7% in July. Shares in UK bank Natwest surged 8% after earnings beat expectations, with higher rates boosting earnings while credit provisions were reduced. The Bank of England meets Thursday with a 50bps rate rise on the cards.

L’Oreal shares rose after reporting strong sales and plans to continue putting through price rises to offset higher production costs. Luxury good makers Hermes jumped 7% after reporting record earnings. Growth in the US was strong while China rebounded. The maker of Birkin bags (custom-made ones can go for US$100,000+) has maintained ambitious growth targets. What recession?

Disclaimer: This article only provides general information; it does not consider your personal needs or circumstances and is not intended to be viewed as financial advice. If you require financial advice, contact one of our financial advisers.

“Regular saving makes you love – and long for – bear markets.”

Nick Murray

They say “consistency is more powerful than perfection”, which also applies to growing your investment portfolio!
One way to manage investment risk during a volatile market is to save regularly, called “dollar-cost averaging”. KiwiSaver is an excellent example of “dollar-cost averaging”. The idea is to invest a set amount of money at regular intervals no matter how the stock market performs. With this approach, you will be able to buy more shares when prices are lower and fewer shares when prices are higher.
As a long-term investor, you should be less concerned about the current price of stocks and more interested in the number of shares you can accumulate over time. You want to accumulate the largest quantity of shares possible. Adding a consistent dollar amount to your investment account regularly to buy as many shares as possible and buying more when prices are lower will help you achieve that goal.
You cannot control share prices and cannot predict with consistent accuracy when prices will change. You can control how much you invest and the strategy you implement. Focus on accumulating as many shares as you possibly can. The best way is to keep saving consistently over time.
Click on the link to learn more about the Power of Regular Savings, including a Hypothetical Scenario, by Ben Brinkerhoff from Consilium.

The Power of Regular Savings in a Volatile Market

Disclaimer: This article is intended to provide general information only. It does not take into account your personal needs or circumstances and is not intended to be viewed as investment or financial advice. Should you require financial advice, you should contact one of our financial advisers—past performance is not a guarantee of future performance.

How often do you wonder about your money and finances? Regularly reviewing your financial needs and goals is essential in increasing your financial health, wealth and wellbeing; this will also ensure you are building financial resilience, which is fundamentally important to provide financial security in the future.

Money Week aims to raise New Zealander’s financial capability by helping them understand money better and improving their financial wellbeing. Click on the link below to learn more.

Volatility is back. Just as many people were starting to think markets only ever move in one direction, the pendulum has swung the other way. Anxiety is a completely natural response to these events. Acting on those emotions, though, can end up doing us more harm than good.

There are a number of tidy-sounding theories about why markets have become more volatile. Among the issues frequently splashed across newspaper front pages: global growth fears, policy uncertainty, geopolitical risk, and even the Ebola virus.

In many cases, these issues are not new. The US Federal Reserve gave notice last year it was contemplating its exit from quantitative easing (an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective). Much of Europe has been struggling with sluggish growth or recession for years, and there are always geopolitical tensions somewhere.

In some ways, the increase in volatility in recent weeks could be just as much a reflection of the fact that volatility has been very low for some time. Investors in aggregate were satisfied earlier this year with a low price on risk, but now they are applying a higher discount rate to risky assets.

So the increase in market volatility is an expression of uncertainty. Markets do not move in one direction. If they did, there would be no return from investing in stocks and bonds. And if volatility remained low forever, there would probably be more reason to worry.

As to what happens next, no one knows for sure. That is the nature of risk. In the meantime, investors can help manage their risk by diversifying broadly across and within asset classes. We have seen the benefit of that in recent weeks as bonds have rallied strongly.

For those still anxious, here are seven simple truths to help you live with volatility:

1. Don’t make presumptions.

Remember that markets are unpredictable and do not always react the way the experts predict they will. When central banks relaxed monetary policy during the crisis of 2008-09, many analysts warned of an inflation breakout. If anything, the reverse has been the case with central banks fretting about deflation.

2. Someone is buying.

Quitting the equity market when prices are falling is like running away from a sale. While prices have been discounted to reflect higher risk, that’s another way of saying expected returns are higher. And while the media headlines proclaim that “investors are dumping stocks,” remember someone is buying them. Those people are often the long-term investors.

3. Market timing is hard.

Recoveries can come just as quickly and just as violently as the prior correction. For instance, in March 2009—when market sentiment was at its worst—the S&P 500 turned and put in seven consecutive months of gains totalling almost 80%. This is not to predict that a similarly vertically shaped recovery is in the cards, but it is a reminder of the dangers for long-term investors of turning paper losses into real ones and paying for the risk without waiting around for the recovery.

4. Never forget the power of diversification.

While equity markets have turned rocky again, highly rated government bonds have flourished. This helps limit the damage to balanced fund investors. So diversification spreads risk and can lessen the bumps in the road.

5. Markets and economies are different things.

The world economy is forever changing, and new forces are replacing old ones. This applies both between and within economies. For instance, falling oil prices can be bad for the energy sector but good for consumers. New economic forces are emerging as global measures of poverty, education, and health improve. A recent OECD study shows how far the world has come in the past 200 years.

6. Nothing lasts forever.

Just as smart investors temper their enthusiasm in booms, they keep a reserve of optimism during busts. And just as loading up on risk when prices are high can leave you exposed to a correction, dumping risk altogether when prices are low means you can miss the turn when it comes. As always in life, moderation is a good policy.

7. Discipline is rewarded.

The market volatility is worrisome, no doubt. The feelings being generated are completely understandable and familiar to those who have seen this before. But through discipline, diversification, and understanding how markets work, the ride can be made bearable. At some point, value re-emerges, risk appetites reawaken, and for those who acknowledged their emotions without acting on them, relief replaces anxiety.

Source:  Jim Parker, from the book, “Outside the Flags”.

This article was written on October 28th, 2014. We feel the points addressed almost ten years ago are once again relevant in today’s market.

‘Upside and downside are two sides of a coin that investors must evaluate.’

– Chris Markoch

Upside, downside is a booklet written by financial writer Mary Holm outlining ways of evaluating risk when investing your money.

Pretty much all investments come with some risk. This PDF guides you through the different types of investment risk, explains why investment risk is not necessarily bad and gives tips on reducing risk.

Different generations of workers (often) want other things. As each generation is in a different stage of their lives, it’s no surprise that they tend to appreciate different types of employee benefits. After all, young Millennial parents have other priorities than a close-to-retirement Baby Boomer.
The Benify study separates employee benefits into categories that employees find most important and those they most appreciate. Let’s see what the overview looks like per generation.

Two things immediately stand out when we look at what benefits people find important.

The first and perhaps the most obvious one is that pension plans gain importance as the generation gets older. This makes sense as graduates who just entered the workforce probably won’t be thinking about their retirement in 40+ years.
The second thing worth noticing here is skills development. Unsurprisingly, the development of new skills is more important for younger generations, as they will be more affected by technological developments than for Baby Boomers.
Regardless of their age, something that tops almost every employee’s list is working hours and leave.

When we look at the benefits employees most appreciate, the top 5 per generation look slightly different. Suddenly, things like food & beverage and mobility pop up on various lists. However, the number one among pretty much every generation is health & wellness.

It’s interesting to see that financial wellness is something that the youngest generation in the workforce, Generation Z, has in its top five. As companies will increasingly hire people from Generation Z, financial wellness will probably become a more important employee benefit.

Benify, Employee Happiness Index 2019. Click here to read more

This article discusses how NZ Superannuation entitlements may be impacted for ex UK migrants following the enactment of The New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. The article does not consider migrants from Countries other than the UK or those that have lived outside the UK.

Dia Eveleigh, Head of Wealth Management, First Capital Financial Services

New Zealand Superannuation Amendment Bill

The New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill has passed its third and final reading in Parliament and is due to become law once Royal Assent is given. The Bill will see the qualifying period for New Zealand Superannuation rise from 10 to 20 years, with a phase-in period starting from 2023.

What is the current criteria?
The Work and Income website states that you may qualify for NZ Super if you:
a) Are over age 65
b) Are a NZ citizen, a permanent resident, or hold a residence class visa
c) Are ordinarily resident in NZ when you apply
d) Have lived in NZ for at least ten years since you turned 20
e) Have lived in NZ for at least five years since you turned 50

The Work and Income website also states, “You may qualify for NZ Super with less than ten years residence if you have migrated to NZ from a Country that NZ has a social security agreement with.”

What does the amendment change?
The amendment means that point d) above will change from 10 years to 20 qualifying years. The new law covers all residents, including born New Zealanders, meaning those who spend significant time overseas could be affected by the law change.
Those born before the 30th of June 1959 will qualify under the current criteria. A phased lifting of the qualifying period applies if born between the 1st of July 1959 and the 1st of July 1977. Applicants born after the 1st of July 1977 are subject to the full 20-year qualifying period.
All other points remain unchanged.

Social Security Agreement with the United Kingdom
New Zealand and the United Kingdom have a social security agreement that covers Superannuation payments; this has not changed. For ex-UK migrants or returning New Zealanders that have lived in the UK, this is important. Article 10 of The Social Welfare (Reciprocity with the United Kingdom) Order 1990 states:
“ … a person who is usually resident in New Zealand shall be treated as if he had been resident there during any period when he was resident in the United Kingdom…”
In other words, time spent as a resident in the UK counts as time spent as a resident in NZ. This is most vital when considering the number of qualifying years required to meet the criteria for New Zealand Superannuation.

An example.
Jane was born on the 2nd of July 1977 and will be 65 in 2042. Jane was living in the United Kingdom between the age of 21 and 63 before migrating to New Zealand with a Permanent Resident Visa. Jane remained living in NZ until the age of 65, at which time she applied for NZ Superannuation. Jane must meet the criteria for NZ Super, including:
i) 20 qualifying years between age 20 and age 65
ii) 5 qualifying years between age 50 and age 65
Jane meets the criteria for NZ Superannuation due to the Social Security Agreement between NZ and the UK. Jane has 42 qualifying years between the age of 21 and 63. Jane meets the “5 years since the age of 50” criteria under Article 10 of the Social Security Agreement by virtue of residence in the United Kingdom.

Potential Issues?
For ex-UK migrants that have lived in the UK for the majority of their life, the Amendment Bill will have little to no effect. However, as the workforce has become more transitionary in recent years, ex-pats who have worked offshore may need to look at their circumstances.

What about my National Insurance payments?
National Insurance payments are required to qualify for a UK State Pension; however, the existence or non-existence of UK National Insurance payments has no bearing on qualifying for NZ Superannuation. This subject is best explained in our e-book titled “State Pension: NZ vs UK” and is available at https://www.firstcapital.co.nz/_files/ugd/d96144_00bddae920b14c349e0e8bd45310223a.pdf.

UK Private Pensions
A UK Private Pension has no impact on qualifying for NZ Super. The rules regarding the transfer of UK Private Pensions are complex and constantly changing. We recommend contacting us to discuss the advantages and disadvantages of transferring UK Private Pensions before making any decisions.

Dai Eveleigh
First Capital Financial Services

References

Refer to Article 10 of The Social Welfare (Reciprocity with the United Kingdom) Order 1990, Schedule: Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of New Zealand

https://www.legislation.govt.nz/regulation/public/1990/0085/latest/DLM137729.html?src=qs

Article 10 is titled “New Zealand National Superannuation by virtue of residence in the United Kingdom”. Article 10 is in The Social Welfare (Reciprocity with the United Kingdom) Order 1990

New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill
https://www.legislation.govt.nz/bill/member/2018/0107/latest/LMS106828.html#LMS475381

Work and Income website:
https://www.workandincome.govt.nz/eligibility/seniors/superannuation/superannuation-overview.html#null