KiwiSaver

Finance Minister Bill English will discuss the portability of superannuation with his Australian counterpart Wayne Swan at their annual meeting on July 16, and the country could stand to gain a “considerable amount” of some $16.6 billion that’s held in “lost accounts” by Australian super schemes.

While the details are yet to be discussed, it is envisaged retirement savings with complying Australian super funds could only be transferred into KiwiSaver funds in New Zealand. Australia’s tax office last year estimated it had around $16.6 billion in superannuation accounts that it can’t account for, and English expects a “considerable amount of this money could belong to New Zealanders who have returned home.”

While there isn’t any data on how much money could potentially be repatriated to Australia, Craig Howie, a spokesman for the minister, said given KiwiSaver was a fairly new scheme and there are some 500,000 kiwis currently living across the Tasman New Zealand should enjoy a net gain.

New Zealand implemented the KiwiSaver scheme in 2007 and topped one million members long before the 2015 target date. The National-led government cut the minimum contribution rate to 2% of an employee’s wage when it came to power last year, a move lauded by ING as making the scheme more attractive. The Australian government passed legislation for compulsory super in 1992, lifting minimum contributions to 9% in 2002.

David Boyle, head of Kiwisaver distribution at ING, said New Zealand’s KiwiSaver funds should see “significant” gains from the move, with Australia’s scheme being embedded for some 17 years, but the “devil would be in the detail.”

“People will be quite motivated to repatriate funds to New Zealand, and the fund managers will of course be happy with that,” he said.

The government needs to take a “sensible” approach in organising any portability scheme, as the volume of paperwork will be very large.

An aging population is becoming a major issue for the global economy, and in its May Budget, New Zealand’s government suspended contributions to the Superannuation Fund, a separate fund to KiwiSaver, set up to help meet future payments to government pensions. Meanwhile, the Labor-led Australian government passed laws to lift the pension eligibility age to 67 by 2023.

KiwiSaver – and workplace savings as a whole – are at a cross roads. A big challenge for industry and policy makers is how best to encourage employers to remain engaged in assisting their employees with their savings.

That’s according to the Association of Superannuation Funds of New Zealand (ASFONZ) which promotes workplace savings. 1 July 2009 marks the second anniversary of the introduction of KiwiSaver.

ASFONZ Chair David Ireland says it is a time to reflect on the scheme and its impact on the savings habits of New Zealanders.

“While the take up rate of KiwiSaver has exceeded all expectations, there is still debate in some quarters as to whether it has had a positive impact on the level of New Zealand savings as a whole.

“Some say that having a quarter of New Zealand’s population signed up as KiwiSavers is a roaring success.

“But others say that with all the incentives in place, only having a quarter of the population enrolled is disappointing.

“Whatever the view, ASFONZ is pleased there finally appears to be some stable policy in place around KiwiSaver.

“Apart from this year’s budget removing the mortgage diversion anomaly, there have been no substantive changes since the design changes announced when the current Government first came into power.

Ireland says the reduction of the compulsory rate of KiwiSaver contribution to 2% earlier this year – especially in the current economic climate – presents an opportunity for savers to think beyond KiwiSaver in planning for their retirement.

“It is incumbent upon both industry and the Government to ensure the environment is as conducive as possible for employers to play a role in encouraging that thinking,” he says.

This is a press release from ASFONZ

Note: Returns are shown gross of tax and net of management fees.

Fisher Funds is bucking the trend towards consolidation among KiwiSaver providers by launching a new Conservative Fund as part of its KiwiSaver Scheme.

The Conservative Fund will be offered to current and prospective Fisher Funds clients in addition to the Fisher Funds KiwiSaver Growth Fund – a fund investing solely in growth assets. 

Fisher Funds managing director Carmel Fisher says the decision to introduce a Conservative Fund is a logical one. 

“We’ve been a big supporter of KiwiSaver since it was launched nearly two years ago. In joining our Growth Fund, our members have recognised the importance of capital growth in what is generally a very long-term investment scheme,” Fisher says. 

“However, we have also been asked by many people, particularly those with less than five years until retirement or those saving for a first home, who wanted us to invest their KiwiSaver savings in more conservative assets.  We’ve listened, and we’re pleased to now be able to cater for their investment needs.”

New and existing members of the Fisher Funds KiwiSaver Scheme will now be able to invest in either the Conservative Fund or Growth Fund or a combination of the two in any ratio they choose. 

Members will also be able to switch their investment strategy as their investment objectives change, at no cost. 

“We are delighted with the support for our Kiwisaver Scheme to date” Fisher says. “The launch of this new fund reinforces our long term commitment to KiwiSaver and to our members.” 

“We still think that most KiwiSaver members should focus on growth for their KiwiSaver scheme, as historically growth assets produce the best long term returns, but that approach does not suit the circumstances of all our potential investors. 

“It has been great to watch the growth in our existing funds with large numbers of our members already having over $50,000 in their accounts.  It’s been quite amazing to see the balances of these accounts grow in such a short space of time.”

“Our KiwiSaver Growth Fund has delivered returns of over 30% since late November 2008, comfortably outperforming the market and other KiwiSaver Growth Schemes. The existing scheme has also attracted over 14,000 members exceeding our expectations. 

“We are excited about the prospects for our KiwiSaver portfolios as investment markets return to ‘normality’ and investors focus on a timeframe beyond the next month.”

The new Conservative Fund is available now.

Fisher Funds is a specialist investment manager, founded in August 1998.  The company manages more than $600 million for 40,000 clients ranging from individual investors (with as little as $500 to invest) and KiwiSaver members, to share market investors who have accessed Fisher Funds’ expertise through their NZX listed investment companies, Kingfish Limited, Barramundi Limited and Marlin Global Limited. Fisher Funds’ New Zealand Growth Fund has been the top performing New Zealand share fund over the past ten years.