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KiwiSaver gets people saving

Monday 18th of October 2010

The Inland Revenue Department's annual KiwiSaver review finds only that "early and indicative results suggest that KiwiSaver has generated some level of new savings", but "there also seems to have been level of substitution between KiwiSaver and other savings vehicles".

"Approximately one-third of households consider that they would be unlikely to save for retirement if they were not members of KiwiSaver", and an estimated one-third say they would have spent their KiwiSaver contributions on daily expenses if they had not joined.

An example of substitution savings is where households put money into KiwiSaver rather than into reducing their mortgage.

"However...it is not yet possible to determine KiwiSaver's impact on savings levels or retirement incomes" and work will start in 2012 to try and assess that, once the scheme has been running for five years.

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Latest Comments
FMA wants clearer fees
@first time caller - I can see the complexity you highlight, but as above, investors should be able to see what they are paying without having to reference multiple documents. Investment admin can track and report deductions for tax, withdrawals, fees et al, would be /should be straightforward to aggregate advice fees into costs at member level... at least I hope so.
20 hours ago Goldcard
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@goldcard - how would you propose that a fund manager calculates the TER to include adviser fees given not all clients pay them and different advisers charge different fees, not to mention some advisors charge different fees to different clients? The advice fee gets disclosed in the adviser's disclosure statement and the statement of advice, so the client can add that to the published TER of the fund they are invested in to see how much they are paying overall.
1 day ago First time caller
FMA wants clearer fees
Schedule 4 of the FMCA regs 2014, particularly clauses 2(1) and 53(3) provide the basis for excluding individually charged advice fees from the statutory TER. This was introduced with the best of intentions, but now it is little more than an invisibility cloak for deductions from member accounts.
1 day ago Goldcard
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@Ross The evidence is pretty clear on that. When advisers work in the best interests of their customers, as opposed to putting their customers into the products that pay them the most, outcomes are improved. (Makes sense doesn't it? Financial advisers go from sales people for fund companies to client fiduciaries.) It might reduce access, but does someone with $50K in a KiwiSaver really need investment 'advice'? A risk profile questionnaire or similar is a much better way to help consumers get into the right fund, i.e. move from a Balanced Fund to a Growth Fund. Why have more developed investment markets, e.g. US, UK, Canada, Aus, Netherlands etc. have banned adviser commissions from fund providers? I'd also add that there is a large group of KiwiSaver customers that are paying someone an advice fee without getting anything beyond a cursory email once a year in exchange. As @Paul says, it's 'easy money' for advisers...
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