Every New Zealander under retirement age should be a part of this scheme and now over 2.1 million Kiwis are. There are a number of great benefits to being involved in Kiwisaver that mean it makes sense for most people. Both employers and the government contribute or provide tax breaks in addition to your own money saved. It gives New Zealanders exposure to productive asset classes outside of term deposits and residential property which generally make up a disproportionate slice of their net wealth.
So it was disturbing to read that, according to a survey done by ANZ Bank, a third of Kiwisavers do not know what type of fund they are invested in. This means that they do not know whether they are invested in a conservative, balanced or growth fund. So a retiree could be riding the waves of a growth portfolio whilst a recent graduate could have all their saving in fixed interest and cash. In addition to this the default funds are generally very conservative and so investors, and the country in general, will be missing out on long term retirement investment return which could make a huge difference to the standard of living of retirees in the future. A much better approach would be to have the default approach being based on the age of the investor (younger = aggressive, older = conservative) so that the risk and the returns will be more appropriate rather than all conservative. This approach was unfortunately recently rejected in a review of Kiwisaver so we are back to default being very conservative. This means investors need to be proactive about ensuring they are in an appropriate type of kiwisaver for their situation.
If this raises any questions for you regarding Kiwisaver or the scheme you are in then please get in touch via our contact page as we can provide some advice in this area if need be.