FINSIA Launches Kiwisaver Report

FOR IMMEDIATE RELEASE: Wednesday 18 August 2011

FINSIA Launches Kiwisaver Report

More than half (57%) of surveyed New Zealanders believe that KiwiSaver membership should be compulsory, according to research released by the Financial Services Institute of Australasia (Finsia) today and commissioned in conjunction with the Institute of Financial Advisers (IFA) for this week’s Financial Awareness Week.

The largest proportion of respondents (27%) believe it should be compulsory for all those aged 18 years or older with the balance thinking it more appropriate to restrict compulsory membership to the employed and/or self-employed.

Finsia CEO Russell Thomas said, “The research findings provide an important and timely contribution to the debate about automatic enrolment into the KiwiSaver scheme, recently foreshadowed by the Prime Minister John Key.”

UMR Research conducted 1000 online interviews between 28 June–10 July on behalf of Finsia and the IFA for this project. Dr Claire Matthews of Massey University was commissioned to analyse the data and report on the research results. The research set out to gauge New Zealanders’ perceptions about KiwiSaver, the importance of saving for retirement, where they obtained their financial advice, and views on the changes to KiwiSaver announced in the 2011 budget.

The research found that half of KiwiSaver members (51%) said the importance of saving for retirement was their primary reason for joining the scheme. Significantly, those who were not KiwiSaver members listed concerns about government rule changing and withdrawing support for the scheme as reasons why they had not joined.

Institute of Financial Advisers CEO Peter Lee says nearly a quarter of respondents are in the six default funds, which by design are very conservatively invested. “While this could be fine for some people, it’s likely many will be in the wrong fund and missing out on a bigger pool of money in retirement. This means many people aren’t making the right decisions, or getting good advice on what to do.”

The study shows there is robust acknowledgement in the community that saving for retirement is vital. Beyond KiwiSaver, more than half of New Zealanders have other investments and savings plans to prepare for retirement.

Commenting on the findings of the paper, Finsia CEO Russell Thomas said: “An aging population creates a number of public policy challenges. With projections that one in five New Zealanders will be aged 65 or over by 2031, KiwiSaver is critical to improving the retirement incomes of New Zealanders.

“The finding that 54% of New Zealanders believe that KiwiSaver has been weakened by the changes in the 2011 budget shows the importance of forging strong and sustained bipartisan support of the scheme if it is to gain higher uptake.

“The fact that 57% of those surveyed expressed strong support for making KiwiSaver compulsory, demonstrates an appetite and willingness for the proposed reforms to the scheme recently proposed by the Prime Minister. Given an aging population and the importance of retirement savings, this is a policy initiative that Finsia supports,” Mr Thomas said.

ENDS

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