KiwiSaver Members Showing Mettle Against Market Volatility, Have More Interest In Annual Statements

The proportion of KiwiSaver members engaging with their annual statements has lifted to a new high of 80% and most members say continuing contributions is a priority, despite ongoing market volatility.

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has released its biennial KiwiSaver Statements research, which seeks to understand members’ engagement with the annual statement.

This year, just over one-fifth (21%) of KiwiSaver members thoroughly read their statements, while 59% briefly read them, for an overall readership rate of 80%. This compares to 76% in 2020, 78% in 2018 and 79% in 2016.

The rate of statement readership is supplemented by overall KiwiSaver engagement, a new data point in this year’s survey. Over six in 10 (63%) members say they typically check their balance at least once a month and this includes 19% who check their balance weekly or more often.

Tammy Peyper, FMA Manager of Investor Capability, said: “This high level of engagement is likely influenced by two-thirds of members having their KiwiSaver with a bank, which means they may regularly see their balance when logging in on a banking app. We want members to stay engaged with their KiwiSaver but there is a risk that investors could react to short-term fluctuations.”

The survey also found 59% of members say continuing their contributions is a priority despite recent market volatility - similar to the previous survey result of 62%. Additionally, 58% are confident in the long-term prospects of KiwiSaver.

Ms Peyper said: “It is heartening to see most KiwiSaver members are staying the course through turbulent markets and are optimistic about the long-term. However, the difficult and uncertain economic climate has shaken some members and likely had an impact on what some feel they can afford to contribute.”

The proportion of members who said they cannot afford to make changes to their contributions increased from 42% to 51%. And more than one-third of members (35%) said they were shocked by the change in their fund’s value, up from 26% previously.

Projected sums prompting action

More KiwiSaver members are taking note of their estimated projected lump sum upon reaching age 65, which has been included in annual statements since 2020. Of those who read their statement, 90% saw the lump sum, compared to 80% in the previous survey.

“Your KiwiSaver statement is a decision-making document and the projected lump sum is a helpful indication of whether you are on track for your retirement goals. We are pleased to see more members are noticing this important aspect of their statements, with half of them intending to act. The most common response was to increase contributions, which is a promising sign because your contribution rate is a major influence on your lump sum.”

Other top responses to the projection included seeking professional financial advice (13%), changing fund type (9%) and using online tools to find out more about the projection (9%).

Ms Peyper said: “It is slightly concerning that fewer people are happy with their retirement balance projection - the proportion of members who think it was around, or more, than they were expecting has dropped from 62% to 53%. But the point of the projection is to get people thinking now, as decisions in the short-term will have long-term impacts.”

Satisfaction levels consistent

Most members remain satisfied with their providers, although this has dropped slightly to 74% from 79% in 2020. Among the 21% who were not satisfied with their provider, the main reason cited was poor fund performance.

Members’ attitudes towards fees have remained consistent with previous years – of those who saw their fees, 53% said fees are ‘about right’ and 30% said fees are too high.

A newly added question about whether perceived value for money is improving found just 7% of members believe their fund was better value compared to the previous year, 38% said it was about the same, and 40% said it was worse.

Ms Peyper said: “Investors’ perceptions of value for money are primarily driven by low fees and fund performance, so it is unsurprising that in a year of lower returns investors report experiencing less value.”

Other new data in this year’s survey found a correlation between a fund’s level of risk and member attitudes towards fees and value. Members in higher risk funds were more likely to be comfortable with their provider’s fee levels and had higher perceptions of value for money, compared to those in lower risk funds.

Ms Peyper said: “Members in conservative funds likely saw their investment returns go backwards¹ in this year’s annual statements, so this may have influenced their perceptions of value for money, particularly as fees are still applied.

“This data also revealed that older age groups are more likely to say their scheme’s fees are too high and are less likely to feel they get good value for money. Similarly, those on lower household incomes are also less likely to believe they are getting good value for money.”

ENDS

Download: KiwiSaver statements research 2022

¹ Source: The investment return for conservative funds for the year to 31 March 2022 was -1.4%, according to Morningstar data.

About the survey: The FMA commissioned FiftyFive5 to conduct research among New Zealanders to understand their views on KiwiSaver annual statements and how they use them. The 2022 research represents the fourth iteration of the KiwiSaver Statements research, which is conducted every two years.

A 10-minute survey was conducted among a representative sample of 2,008 New Zealanders aged 18 and over from the 6th to the 14th of July 2022.

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