Most Kiwis support compulsory KiwiSaver

About 78% of New Zealanders support making KiwiSaver compulsory and 73% support an increase in contribution rates, according to a survey commissioned by the Financial Services Council.

The council, whose members are KiwiSaver providers, said the survey of 2,000 people was conducted by CoreData.

"As an additional indicator of support, over 75% of respondents thought they were getting value for money for the KiwiSaver fees they pay," said FSC chief executive Richard Klipin.

"The research also found that New Zealanders are deeply worried about not having enough savings for their retirement," Klipin said.

The average KiwiSaver balance of just over $25,000 means "there's a yawning gap between what New Zealanders have in their KiwiSaver and what they need to save. That means most Kiwis will fall short of being able to fund a modest retirement, let alone a comfortable one", he said.

About 17% of New Zealanders are not contributing to KiwiSaver at all and more than 30% of those who are contributing pay in the minimum 3% of earnings.

All New Zealanders over age 65 are entitled to government superannuation which is currently $506.64 a week before tax for a single person and $768.92 for a couple.

ASB KiwiSaver comes out poorly in survey

ASB KiwiSaver ranks last for customer satisfaction, Consumer NZ survey finds.

Just 43% of ASB customers were happy with the service they were getting. Consumer NZ chief executive Jon Duffy said ASB’s score was significantly below the market average of 55%.

“ASB also scored below average on all our key satisfaction measures. Just 37% of customers thought ASB did a good job keeping them up to date about their investment, compared with the industry average of 48%,” Duffy said.

ANZ, the biggest KiwiSaver provider, also scored significantly below average for overall satisfaction with a rating of 50%.

“The best performers this year were streets ahead. Milford Funds came out on top with 85% overall satisfaction. It scored particularly well for access to account information (93%) and keeping customers updated about their investment (84%).”

Simplicity was second placed (74%) and Aon New Zealand third (73%). 

"Our results show a big difference between the best and worst performers when it comes to keeping customers informed about what’s happening with their money," Duffy said.

Across the market, six out of 10 Kiwis didn’t know how their fund was faring compared with others. Fee transparency was also a big issue. Seventy percent didn’t know how much they paid in fees. The amount KiwiSaver providers earn from fees has continued to rise, totaling $539 million in 2020.

The survey also showed many Kiwis want to know their money is invested responsibly.

Almost half (48%) said they wanted a fund that provides a good return and invests responsibly – both were equally important. A further 13% ranked responsible investment as the priority.

One in three KiwiSavers said they would be very concerned if their money was invested in oil and gas exploration. However, 68% were unsure whether their provider invested in this area.

Changes announced by the government mean that from December default KiwiSaver providers will no longer be able to invest in fossil fuels. They will also be required to publish a responsible investment policy on their website.

Other changes to default schemes will see a drop in charges, a move which should put pressure on industry competitors to review their fees, Duffy said.

Kiwi Wealth to invest up to $50 million in Pioneer Capital

Kiwi Wealth KiwiSaver has committed up to $50 million to leading investment firm Pioneer Capital with a focus on New Zealand businesses exporting high-value products and services in large international markets.

The commitment is part of Pioneer Capital’s latest $300 million fund –  Pioneer Capital Partners IV – and sees Kiwi Wealth joining cornerstone investors such as the NZ Super Fund ($100 million invested) and Ngāi Tahu Holdings ($30 million), with funds being drawn down as underlying investments are made.

The news follows last year’s announcement of Kiwi Wealth KiwiSaver Scheme’s cornerstone investment in the Movac Fund 5, a technology fund of venture capital firm Movac.

Its latest investment is designed to give KiwiSaver members more access to private business in the high-growth export sector.

Kiwi Wealth retail and product general manager Melissa Vasta says Pioneer Capital has a strong track record in an investment market where there are few players in New Zealand.

"This is good news for 'NZ Inc' and follows the direction of travel for global investment and the delivery of value to shareholders," she says.

"Kiwi Wealth KiwiSaver Scheme members will know that some of their investments are being held in companies that are generating value for the New Zealand economy, creating local jobs and delivering good

"While this is a small allocation of our total KiwiSaver funds, it represents a significant opportunity for internationally focused Kiwi businesses to continue to make their mark on the world stage.”

Since it was founded in 2005, Pioneer Capital has invested in 23 Kiwi businesses that have an aggregate annual revenue of over $1 billion, of which over 85% is earned outside New Zealand.

Kiwi Wealth chief investment officer Simon O’Grady says the agreement with Pioneer Capital represents another step in Kiwi Wealth’s burgeoning series of private equity investments.

He says Pioneer Capital sits attractively in the mid-stage between start-ups and the mature end of the market, focusing on expansion capital for high-value export enterprises with established operating bases – in particular, health and wellness, premium food and beverage, and technology-enabled businesses.

Pioneer Capital managing director Randal Barrett says Kiwi Wealth is one of the only KiwiSaver providers to give its members access to private businesses in New Zealand, which make up the vast majority of New Zealand’s economy by proportion of GDP and industry diversity.

“In the pandemic economy, private equity-owned businesses have had the luxury of being tightly held and governed so they can make quick decisions and move to avert risk and take advantage of opportunity.

Barrett says Pioneer Capital Partners IV will make its first few investments into high-value export-focused companies within a year and, as an open-ended fund, can take a long-term view with these and additional investments.

“New Zealand is incredibly well placed in the world markets; its profile has risen and in the sectors in which we focus many New Zealand companies are internationally competitive and have grown to scale very quickly in large markets.

"Our goal is to turn these companies into mini-multinationals, with operations on the ground locally and capability around the world."

KiwiSaver funds bankroll community housing

Generate and Caresaver KiwiSaver are backing a community housing initiative seeking to raise $100 million in funding for as many as 300 low-cost houses, much of it to be built on unused urban church land.

Community Finance said it had reached the halfway stage of its Aotearoa Pledge targets, with cornerstone commitments of $10m each from the two KiwiSaver providers and ANZ Bank, while Forsyth Barr, Lindsay Foundation and WEL Energy Trust have contributed a combined $11m.

Chief executive James Palmer said the platform, established in 2019 with the backing of the Lindsay Foundation, the Tindall Foundation, the Matua Foundation and Christian Savings, was hoping to see other fund managers, community foundations and businesses "step up this year".

Its latest campaign follows the successful launch of its Salvation Army community bond last year, which raised $40m for the construction of 118 mixed-use homes in Royal Oak, Westgate and Flat Bush, near Auckland.

While that effort comes in at about $339,000 per house, it is known the Salvation Army contributed significantly on top of the funds borrowed from Community Finance.

The return for Generate, which bought $20m worth of those bonds, is 2.3% per annum. Community Finance said it typically charges less than 0.65% to manage the investments, lending and impact reporting.

Palmer said the model is "an efficient and robust solution for financing large scale affordable housing developments and is proven to deliver".

Community Finance said it has $1b in community housing projects on its books across Otago, Canterbury, Wellington, Hawke's Bay and Auckland.

It hasn't confirmed any of the new sites under the latest scheme, outside of several sites in the Waikato, under the WEL community bond investment.

Economist and Community Finance director Shamubeel Eaqub said it was exciting to see private capital in the pledge, as "the housing crisis is too big to be solved by philanthropic funds alone".

"When we can unleash the investments of ordinary New Zealanders, to the benefit of housing New Zealanders, we can move the dial.”