Clearest picture yet of retirement income

7 September 2016

Kiwi Wealth digital tool presents clearest picture yet of retirement income

KiwiSaver plays a vital role in New Zealanders’ retirement income but it is just one of a range of factors that will determine the lifestyle people will have when they finish working, says Kiwi Wealth.

Having successfully launched a digital tool calculating and storing KiwiSaver members’ projected retirement income, Kiwi Wealth is adding new online functionality to offer members the clearest picture yet of how much income they may have available to them when they retire.

“Retirement planning involves more than just KiwiSaver,” says Joe Bishop, Kiwi Wealth Head of Retail Wealth and Marketing.

“While it will likely make up the bulk of people’s retirement income assets, your KiwiSaver account isn’t the only thing that will give you the retirement lifestyle you desire. There are many other factors – private savings, term deposits, managed funds, property and even inheritances, for example – that can affect projected retirement income.

“Most people never have a clear idea of how these translate into an annual, dollar-based income in retirement. What we are doing with our digital tool is to build these aspects in via one simple portal that shows people how much money they could have at retirement.”

The Kiwi Wealth tool uses current balance, contribution rates, projected returns and other economic factors to calculate an estimate the lump sum and retirement income. It calculates how changes to factors such as fund type and contribution level could affect the growth trajectory of their investment and members can make those changes, most at the click of a button.

New Zealand Superannuation will be included in the tool this month, meaning users can incorporate it alongside their KiwiSaver investment.

A recent Horizon Research survey of 781 people with KiwiSaver accounts found that 77% did not know what their KiwiSaver account could be worth when they retire. Helping customers be more active with their investments and have the information they need to make informed decisions underpinned Kiwi Wealth’s ethos and highlighted the value of the digital tool, said Mr Bishop.

“Customers using it are already much more involved in their KiwiSaver account. They’re taking control over their investments and are on the path to a better retirement.”

Kiwi Wealth is also participating in a trial with the Financial Markets Authority, Commission for Financial Capability, and Ministry for Business Innovation and Employment to investigate behavioural interventions that encourage people to make better financial decisions.

The six-month randomised control trial will test how changes to the design and phrasing of enrolment communications can prompt people to assess and change their fund to suit their retirement expectations. The trial is expected to include approximately 3000 new entrants to Kiwi Wealth’s KiwiSaver scheme.

ENDS

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