KiwiSaver advice practices will always be a point of interest to the Financial Markets Authority, its director of markets oversight says.
The FMA has released its latest KiwiSaver report, which shows the amount earned from the scheme’s investments doubled in the year to March from a year earlier. Assets increased by 33% to $28.5 billion.
The FMA expects to publish a report on KiwiSaver sales and advice practices later this year.
There had been concerns about KiwiSaver members being encouraged to switch fund without adequate information but the report showed that transfers had plateaued. Many of the switches were people making an active choice to move from a default fund, which the FMA regards as positive.
About 93,000 KiwiSaver members switched fund during the year, involving $1.4 billion. More than 260 members switched their type of fund at least five times during the year.
Just under 45% of KiwiSaver assets are in low-risk investments, down from 47% in 2014.
The FMA says about two-thirds of advisers offer some form of KiwiSaver advice.
FMA director of markets oversight Garth Stanish said as balances grew it was likely more would start.
He said it was important that people received appropriate levels of support and advice when they were making decisions that would have long-term consequences. Default providers are now required to report to the FMA on financial literacy initiatives, including communications to members to encourage them to choose a fund. The FMA says it will report on this next year.
Stanish said the FMA would continue to engage with providers who are working with KiwiSaver. He said a focus for the FMA was ensuring that KiwiSaver investors had a good understanding of their investments and the positives and benefits of the fund they were in. “It is still a relatively new product in the New Zealand context and people will take time to get to grips with it as a long-term investment procut. The choices they make today can have long-term repercussions.”
The FMA report showed there are still about a million members who are classed as non-contributors, which means they have not made a contribution in the last two months or have failed to make contracted payments.
About 18,700 employers had chosen a preferred scheme for their members to be automatically enrolled in unless they chose another scheme.