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.

Westpac NZ is reducing fees on its KiwiSaver Scheme funds saying the drop will deliver significant savings for its more than 380,000 members.

As well as removing its annual $12 administration fee, the bank is also cutting a range of fund charges by up to 39%.

BT Funds Management NZ manages the Westpac KiwiSaver Scheme.

It was re-appointed as one of six KiwiSaver default providers in May this year following a seven-yearly Government review.

Annual fees on a $20,000 balance will reduce from $130 to $80 for its Conservative Fund, $158 to $100 for its Balanced Fund and $172 to $110 for Westpac's Growth fund (see chart below).

Westpac NZ acting chief executive Simon Power says the reductions will help Westpac KiwiSaver Scheme members grow their KiwiSaver balances.

“These changes will provide real savings for all members, regardless of their fund balance or stage in life.

“We last cut our Westpac KiwiSaver Scheme fees in December 2019, and we’re pleased to follow this up with another significant reduction for members," Power says.

“Removing the annual administration fee will have a particularly positive effect on members with low balances."

Fees for Westpac’s Cash Fund will drop from 0.29% to 0.25%, fees for its Balanced Fund will drop from 0.73% to 0.50%, and Growth Fund fees will drop from 0.80% to 0.55%.

The fee changes on existing funds will take effect at the end of September and Westpac's new Default Balanced Fund will open to members in December.

Members will be notified directly of the changes in the coming months.

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.

The FMA are calling on young Kiwis to check they are in the right KiwiSaver fund following the large-scale switching during Covid-19 market fluctuations.

The regulator has shared data indicating over 12,000 KiwiSaver members aged 26-35 years old are sitting in lower risk or conservative funds after switching from higher-risk growth funds during Covid-19 market volatility.

Data supplied to the FMA by 11 KiwiSaver providers shows around 12,700 younger KiwiSaver members switched from growth to conservative funds between February and April last year.

Most of them are still sitting in conservative funds, which may not be aligned with their long-term savings goals.

FMA manager of investor capability Gillian Boyes says, is calling for young New Zealanders to check if they’re in the fund that suits their needs.

“Generally speaking, you should be in a high growth fund the younger you are and the further you are from retirement.

“Growth funds provide the greatest opportunity to maximise returns and although the balance might jump around, young people have plenty of time until retirement age to recover any losses.

“The exception is if you are planning to make a first-home withdrawal within the next one to three years and may want to choose a conservative fund so you have more certainty around your balance.”

Boyes said the number of young people who are in a fund that does not match their needs is likely larger than the data suggests, as FMA data represents around three-quarters of the KiwiSaver market.

The FMA will soon release the full dataset in a report focused on KiwiSaver fund switching during the pandemic.

Head of sales and marketing at Mint Asset Management, David Boyle says that the data does not surprise him, but the demographic age range does raise an eyebrow or two.

“In that period last year when Covid hit we saw a number of New Zealanders make this change. I think it was around $450 million dollars that moved from growth to conservative.

“I am a bit surprised by the numbers of younger people being involved.”

According to Boyle this is an issue that can only be solved by all KiwiSaver providers working together.

“Every KiwiSaver provider should be looking at how they communicate with their members.

“This data … shows there is actually quite a large number of young people in conservative funds where they [may think they] don’t need to be worrying about [fund choice] too much because retirement is a long way away.”

Boyle says that in talking to these members it is crucial that all providers are singing from the same songsheet in getting the youth engaged in their KiwiSavers.

“This whole thing highlights that this conversation and the messaging around it needs to be similar across all providers.

“The power of all providers saying the same thing on this is crucial if this message is going to get out to the masses.”