Advisers have an opportunity to encourage people to use their KiwiSaver statements to work out whether they are on track for retirement, although few of them seem to be taking it, the Financial Markets Authority says.
It has released the results of a new survey, which showed 21% of KiwiSaver members had read their provider’s annual statement thoroughly. Another 58% had looked briefly at it.
Only 23% had looked to see whether they were on track to achieve the outcome they wanted.
Paul Gregory, FMA director of external communications and investor capability, said that the annual statement should be an important trigger for members to think about what they were saving and investing for. “When this arrives through your letterbox, or in your email, it’s a great opportunity to check in with your goals. And, if you’re not happy, to check in with your KiwiSaver provider.”
People should consider the income they wanted in retirement, and the amount they would need to save to get there, whether they were on track and, if not, what they could do about it.
Of those who checked to see if they were on track, only 15% said they had talked to a financial adviser, compared to 43% who had used an online calculator.
Gregory said advisers could use the annual statements as an opportunity to engage clients and make sure they had a plan.
He said there was room for improvement in the statements from providers.
Almost three-quarters of respondents said they wanted to see information about the lump sum they were on track to get, 62% wanted to see what level of income that sum would deliver and 37% said they wanted to see their fees represented as a dollar amount. At the moment, providers often only give details of the administration fee, not the management component.
Gregory said that was something advisers could encourage their clients to ask their providers for.
The Ministry of Business Innovation and Employment is currently working with the FMA and the Commission for Financial Capability to review the format and content of the KiwiSaver annual statement to consider ways to improve the information provided. The results of the FMA survey will be taken into account.
Respondents said high fees (43%), a fund losing money (36%) and another provider achieving better returns (36%) were the things that were most likely to prompt them to change their KiwiSaver provider. Only 11% said they would switch because another provider asked them to join their scheme.