More people over the pension age are choosing to keep their KiwiSaver funds active, AMP Wealth Management says.
“We’re seeing fewer KiwiSaver clients withdrawing all their funds when they reach retirement age,” chief executive Blair Vernon said.
“In fact, nearly 7% less than this time last year, representing about $4 million in KiwiSaver investments.”
Vernon said low interest rates were one possible reason for the trend, but said KiwiSaver offered more than a better return.
“Another compelling feature of KiwiSaver for members aged 65-plus compared to some other savings products is the ability to withdraw partial amounts from your funds whenever you like, or need, without incurring any penalty. This can be especially important for this demographic as their needs change.”
The Financial Markets Authority’s annual profile of KiwiSaver members showed an 11% increase in members aged in their 70s in the last two years.
A survey by AMP revealed that more than 25% of respondents expected to still need to be working full-time when they reached 65 and more than 40% thought they would be working part-time.
Financial adviser Michael Cave said the current cohort of KiwiSaver members who had recently retired were most likely very pleasantly surprised at having an unexpected nest egg.
“We know that an increasing number of older Kiwis are struggling to save financially and many hadn’t counted on getting to retirement having built up a good level of savings, but KiwiSaver is helping to change that.
“For those aged 65-plus, the fact that their KiwiSaver money is currently working harder for them compared to bank deposits for example, while also allowing greater flexibility, means it makes absolute sense for them to stay in KiwiSaver,” he said.
AMP pays its own staff their employer contributions at a rate of 12% past 65, although it is not a requirement.