We Need to Take The Mystery Out of KiwiSaver

We need to take the mystery out of KiwiSaver

With a wide variety of providers and funds all offering variations of an investment that we can have from childhood, but focused on our retirement, talking about KiwiSaver is never going to be straightforward. However, Canstar argues that it does need to feel more relevant.

As we know, the headline numbers around KiwiSaver are impressive. Only 10 years in existence and yet over 2.7 million members. Unfortunately 572,000 still remain in default schemes and a further 131,000 people have elected not to contribute to their account for up to five years. These figures are well covered but what is not often talked about is why a lot of these people may be disengaged.

“We strongly believe there is an opportunity to rethink the way we talk about KiwiSaver to improve engagement.” says Jose George, general manager of Canstar NZ. “In other areas the way consumer finance is talked about tends to correlate to a target audience – kids and tertiary banking, first time home buyers, car finance or even insurance. But, when it comes to KiwiSaver, the dialogue is littered with investment jargon such as asset allocations, risk profiles and the ongoing debate around the importance of fees or performance. These are important bottom line features of KiwiSaver but it’s certainly not being discussed in everyday relatable language. We strongly believe that to engage and activate members, KiwiSaver ‘speak’ must be demystified.”

George continues:

“We should have a life-long relationship with our KiwiSaver and as with all relationships, the way we view it and our approach to it changes over time.

“To draw an analogy, when we are younger, time is on our side and we may be more prepared to take risks, mid-life, growth is important but we also think about protecting what we’ve mange to acquire or accumulate. Pre-retirement, conservation and protection is obviously front of mind.”

The ongoing debate around the effect of fees versus the importance of performance on the long-term health of a KiwiSaver is not helpful for a majority of voluntary savers. It is evident that both play an important role in ensuring an optimal outcome and should never be considered in isolation. The flexibility and features offered by each fund also play an important part in determining what is best suited to an individual’s preferences and requirements.

Canstar’s annual KiwiSaver review

Taking fees, performance and product features into consideration, each year Canstar reviews and rates KiwiSaver options. For 2017, 129 products (across six fund profiles: Aggressive, Growth, Balanced, Conservative, Defensive, Cash) from 16providers were compared. The top rated products are shown in the table below. More detailed information and comparisons are freely available at canstar.co.nz

Speaking on behalf of ASB, who achieved top rated products across all of their fund profiles, ASB General Manager Wealth Jonathan Beale says ASB is thrilled to be recognised for outstanding value across all its funds.

“Balancing outstanding performance, low fees and features that customers want has been a real focus for ASB. The Canstar methodology provides great insight for customer to understand how their scheme is rated and differentiates us from others in the market.”

George concludes:

“On canstar.co.nz our comparison tables show that for growth funds, the highest annual fee has not attracted the highest growth. Then again, different fund balances will prompt differing results and everything comes with the health warning that KiwiSaver is a long-term game, so don’t focus on short-term returns.”

For further information and a full list of Canstar Five Star Ratings KiwiSaver, 2017, please visit the Canstar website.

ENDS

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