KiwiSaver

Only 9% of New Zealanders think the country’s superannuation is enough to live on in retirement, survey results released by the Financial Services Council show.

About 65% said it was not enough to live on. Ten per cent said they were not sure and 15% were neutral.

NZ Superannuation provides an individual $349 a week.

FSC chief executive Peter Neilson said despite that, New Zealanders were not doing enough to save for their retirement and standard KiwiSaver contributions were insufficient.

“Whilst 2 million New Zealanders have enrolled in KiwiSaver most are currently contributing at 2 per cent for the employee and 2 per cent for the employer respectively. At a 2 per cent contribution from employee/employer individuals will fall below the savings threshold that will provide them with a comfortable retirement.”

He said people needed to save 10% of their income from the time they started working to achieve a comfortable retirement.

The option to withdraw KiwiSaver fund to buy a first home should be retained but other changes made if default funds are changed to “life stages” settings, Mercer says.

Mercer, one of the default providers, has about $800 million under management in KiwiSaver and Mercer’s New Zealand boss Martin Lewington said the first-home option has been used by only about 1% of its members so far.

But he said home ownership was important for New Zealanders and KiwiSaver members should still be able to use it for that purpose.

“We know New Zealanders want to buy their own home; it’s part of the New Zealand psyche even if it is getting expensive.”

Lewington said Mercer also supported switching the default funds to “life stages” or “whole of life” settings, meaning investors’ asset allocation was automatically adjusted as they aged.

“What we’ve observed in the USA and the UK is whole of life offerings have a higher probability of delivering much a better outcome than a set and forget conservative option.”

The problem, he said, was that many prospective first-home buyers were in their 20s and 30s, meaning their default setting under a “life stages” approach would be very aggressive.

But if they were going to pull their money out in a few years they would need to focus on capital preservation.

Mercer’s suggested solution is to include a question for members asking whether they think they will buy a house within the next 10 years.

“You’d be put within a relatively conservative fund for 10 years then your risk profile and amount of exposure to growth assets would be increased and then gradually decline again along the whole of life path as you get closer to retirement.”

TSB bought into a stake in a KiwiSaver fund manager without having any authorised financial advisers on staff.

TSB became Fisher Funds’ second-largest shareholder, with a 26% stake, when it backed its acquisition of TOWER’s investment business last month.

But its first priority now is upskilling its staff as it does not have anyone qualified to advise on investments.

Morrison Co, previously Fisher Funds’ second-ranked shareholder after the Fishers themselves, was shunted down the ranks and did not inject any capital into the deal.

Kevin Murphy, chief executive of TSB, said the bank has no authorised financial advisers. Training staff to be able to offer KiwiSaver products was a priority.

TSB had offered KiwiSaver products through SuperLife. Murphy would not say how many customers it had placed with the investment provider.

Murphy said despite the existing relationship with SuperLife, TSB had been looking for a way to have more presence in the KiwiSaver market. “It worked well but we were looking for greater impetus.”

He said Fisher Funds’ products, distribution and presence in the market were a good fit for TSB.

Whether the relationship with SuperLife would continue in any capacity, he would not say. “It’s early days, we’re still working through that.”

TSB would not offer Fisher Funds KiwiSaver products in its branches until staff were sufficiently qualified, he said.

ASB is closing down its KiwiSaver scheme set up for advisers and is currently considering its future options for the product.

It says that, as part of a review of its KiwiSaver schemes, it will no longer be accepting applications to join the FirstChoice KiwiSaver.

First Choice differs from the ASB KiwiSaver scheme as it has actively managed funds and was setup for advisers and as a distribution option for Sovereign. The ASB scheme uses index funds and is sold through the bank distribution network.

Currently First Choice has around 15,000 members and $200 million of funds under management while the ASB scheme has 370,000 members and more than $2 billion.

ASB’s Executive General Manager Wealth and Insurance Blair Turnbull says the reasons behind the change are largely to do with economics. He says some of the funds within First Choice, including the Sustainability fund which invests in former US vice president Al Gore’s company, have small amounts of funds under management.

Although First Choice has active funds there is a skew towards conservative, cash and balanced funds in the scheme.

He says that ASB GI, the manager of both FirstChoice and the ASB KiwiSaver Scheme, is considering its options for FirstChoice, including the possibility of transferring members to an alternative scheme.

ASB is continuing to develop its flagship scheme which includes adding some actively manage fund options “in the not too distant future.”