KiwiSaver

Investors who have joined the KiwiSaver scheme generally think they made the right decision though they fret about future government meddling with the programme, according to an ING (NZ) survey.About 95% of those who joined the scheme say they made a good decision, according to the quarterly survey. Some 50% are concerned the government may significantly change or abolish KiwiSaver, down from 54% in the previous survey.

“If we are to keep seeing positive increases in the number of people joining KiwiSaver, the main political parties will need to continue to provide additional reassurance that the scheme, and the benefits that are on offer as part of the scheme, are here to stay,” said Steven Giannoulis, ING’s general manager of investor services.

More than 700,000 people had signed up to KiwiSaver retirement savings scheme as of its first 12 months ended this month. As at July 1,718,000 New Zealanders had enrolled, more than twice the forecast 275,000, as people were attracted to the scheme’s NZ$1,000 tax-free incentive, tax credits and fee subsidy.

The number of people joining the scheme because of concern about market volatility jumped to 17% from 7% in the previous survey. The NZX 50 Index has dropped 12% in the past three months, extending its 12 month slide to about 28%.

The survey was of 100 private investors aged 30 years or more, with disposable assets or investments of at least US$100,000. ING has more than 130,000 members enrolled in the scheme, amounting to 20% of the total.

In April alone there were 78,000 New Zealanders who joined KiwiSaver, in response to the government’s enhancements to the scheme. Finance Minister Michael Cullen
On April 1, the government introduced compulsory employer contributions and the government tax credits to support them.

Over 2,600 new KiwiSavers were signed up every day in April, making it the biggest month for KiwiSaver yet and taking total enrolments to 600,043 just 10 months after the scheme’s launch. Initial projections were for 270,000 people to sign up after the first full year.

“New Zealanders are jumping at the opportunity to save for their retirement in numbers that few people could have predicted,” finance Minister Michael Cullen said. “After 10 months we now have more than twice as many people in KiwiSaver than we predicted to after the first year.”

Cullen believes the scheme is a “major assault on income inequality in retirement” and the numbers show a massive expansion of people saving privately.

Revenue Minister Peter Dunn believes, one of the main factors behind KiwiSaver’s success has been the willingness of employers and workers to learn about the scheme and be patient as the government worked through teething problems.

“This time last year as we planned to announce the enhancements we were not expecting a response anywhere near this big. It is a credit to Inland Revenue, employers, scheme providers and KiwiSavers themselves that the implementation process has gone as smoothly as it has,” Dunn said.

The number of New Zealanders in KiwiSaver has surged, following the employer contributions and tax credits that came into effect at the beginning of April.As at 9 April, 542,338 New Zealanders are enrolled in KiwiSaver, with over 20,000 of those members having joined from 1 April.

“The number of New Zealanders getting behind KiwiSaver continues to amaze,” Finance Minister Michael Cullen said today. “Over 2,000 people have joined KiwiSaver every day in April – a huge response to the enhancements introduced by the government at the start of the month.”

Cullen does not expect that pace to continue, but says it’s safe to say skeptics who thought Kiwis would turn down the chance to save for their retirement were “dead wrong. New Zealand workers have turned KiwiSaver into arguably the most successful voluntary savings initiative anywhere in the world, and certainly a blueprint for other nations.”

There are over 100,000 KiwiSavers under 25 and many more joining through automatic enrollment.

Investors offered opportunity for global investment spread and sustainability through NZ’s first Global Sustainability Investment FundKiwiSavers who want to invest long term with companies committed to sustainable activities and practices can now do so through a fund being made available in New Zealand by ASB Group Investments Limited (“ASB”).

The new Global Sustainability Fund will be offered to investors under the FirstChoice KiwiSaver Scheme.

The investment manager for this new fund is Generation Investment Management, established in 2004 by former US Vice President, Al Gore and former global CEO of Goldman Sachs Asset Management, David Blood. Generation Investment Management currently has more than US$1.2 billion of funds under management.

The Global Sustainability Fund provides investors with access to a growth fund comprising 100% global shares, all of which have an absolute focus on sustainability. Existing FirstChoice KiwiSavers will have the option to transfer all or part of their current savings into the new fund.

FirstChoice KiwiSaver comprises 10 funds of which 5 are active funds, which means the investment managers endeavour to exceed market returns. These types of funds are subject to market volatility. FirstChoice funds will continue to be offered to the public directly by ASB Group Investments and through financial advisers and brokers. Index linked funds (sometimes called passive funds) will be available to KiwiSaver investors through ASB Bank branches.

“Our Global Sustainability Fund is currently the only true sustainability fund available to KiwiSavers,” said Greg McAllister, Head of Wholesale Distribution, ASB Group Investments.

“Other funds may include some elements of sustainability, but are more accurately described as ethical or socially responsible funds.

“Our research has highlighted that there is growing interest in investing in sustainability funds and that this demand is not being met.

“The aim of the Global Sustainability Fund will be to seek to achieve superior returns while focusing on investing in global companies that are committed in their business decision making and operations to minimising the social, economic, environmental, ethical and governance impacts of their businesses on society.

“Sustainability investing is recognised as a ‘third generation’ approach to investing in corporations that are responsive to global social challenges. It is more than just ethical and socially responsible investing,” said McAllister.

Companies included in the fund portfolio are analysed against criteria such as their response to future regulation change, potential pandemics, climate change, engagement with stakeholders, human resource practices and their corporate governance standards; as well as their long-term potential to perform financially.

“Until now, to invest in a true sustainability fund, New Zealanders have had to invest directly offshore,” said McAllister.

“Our research has also identified Generation Investment Management as the international market leader.”

The Global Sustainability Fund at any one time tracks the performance of up to 100 global companies, while investing in between 25 and 60 different equities.

“Simply meeting sustainability criteria is not enough,” said McAllister. “To be included in the portfolio, companies must also perform financially.”

The Global Sustainability Fund is now available through FirstChoice KiwiSaver. Investors wanting to join the new fund should contact ASB Group Investments on 0800 1STCHOICE or 0800 178 246 or their adviser.