KiwiSaver

Despite a marked increase in the public’s awareness of KiwiSaver, the new government retirement savings initiative still doesn’t register a high level of engagement.This is the main finding of the second in a series of nationwide surveys on KiwiSaver undertaken by New Zealand financial and superannuation specialist, ING. The on-line survey polled 600 New Zealanders aged between 18-64.

In the first survey, conducted in May, only 62% of working-age New Zealanders were aware that a Workplace savings scheme was to be launched in July – although almost two thirds were in favour of the concept.

Two weeks out from the launch, ING’s second survey showed a staggering 99% of those polled knew of KiwiSaver. But although the same two-thirds proportion were still “generally in favour”, only 46% confirmed they would take it up.

Meanwhile, confusion still reigns, with just one in eight of those polled (13%) saying they felt “very familiar with the ins and outs of KiwiSaver”.

The survey – split 54% female and 46% male – included those in four income bands covering less than $40,000 to more than $90,000 and four age bands, 18-29, 30-39, 40-49 and 50-64. It also asked how ready New Zealanders were for retirement. These results were particularly revealing.

While only 5% of those polled felt the current NZ Super payment will be enough for when they retire, Almost 70% said they had “no savings strategy in place”. Of those who were saving, 61% listed their home as part of their retirement savings.

And one third reported they found their current financial situation “quite tough” – either struggling to make ends meet or having to budget very carefully.

Two thirds of those polled owned their own home, 60% were tertiary qualified, 60% were also employees, And 25% employers or self-employed.

Looking to the future, more than 60% expect to be working until the age of 65 and over half said they would be seeking full-time or part-time work beyond that time. Around 68% also felt that the current age of super entitlement should be lifted.

Other key survey findings were:

• Of the 46% who “expect to join KiwiSaver”, nearly two thirds will opt for the 4% contribution rather than 8%
• More than two thirds (72%) will “do their own homework or ask around” before deciding on their KiwiSaver provider
• 11% say they will opt for a default provider
• Females and those nearing retirement age are the most likely to sign up.

Steven Giannoulis, ING’s general manager marketing and investor services, says the new survey “clearly shows that in the lead-up to the launch of KiwiSaver, a large number of New Zealanders were looking for as much information about the scheme as they could”.

He says that the main hurdle to the uptake of the scheme by individuals will be procrastination during the ‘homework’ and decision-making process.

“The survey also shows that New Zealanders favour ‘self-help’ to a high degree, yet many are working from a weak knowledge base.

“It is now up to the Government, KiwiSaver providers and financial advisers to arm as many New Zealanders as they can with information that is both relevant and timely. I’m confident that the more people learn about the benefits of KiwiSaver, the more they will be encouraged to join.”

ING, one of the six government-appointed default KiwiSaver providers, intends to do a final survey within the next six months, measuring the take-up of KiwiSaver by employees and the response from employers.

An innovative project between the Westland District and an investment fund aims to see 1500 school kids and pre-schoolers signed up with KiwiSaver by the end of August.
Press Release

The project was initiated by the Westland District Mayor Maureen Pugh.

We already have a well recognised KiwiSaver provider who is working with us and we will be in a position to reveal some exciting details of their proposal next week.

Millions of dollars will be generated for our children and non-working people by simply applying to the KiwiSaver programme, with no further contribution required.

Encouraging the children to sign up and receive the Governments kick start means they will have a nest egg to draw on for their first home, and possibly qualify for the first home subsidy as well.

That means that Westland has a much greater chance of encouraging the next generation to remain on the Coast and thats one of the fundamental reasons we think this is a great scheme to support.

I have been contacting all Westland school principals and the support for the project has been overwhelming. They really are enthusiastic about getting their pupils started on the road to financial security and they wonder if there is a catch but there isnt one I really think its the opportunity of the decade for Westland.

We believe that KiwiSaver will also give Coast kids an incentive to save which is something children all over New Zealand have been missing out on for the last two generations, Mayor Pugh says.

Kids know about credit and hire purchase but very little about the need to save. West Coast parents have always tried to instil good habits and values in their children and we are confident that they will seize this simple opportunity to give their kids a government guaranteed advantage in life.

Mayor Pugh says she will be promoting the idea to next weeks Local Government Conference. We might be leading the way on this but Im confident many other Mayors will want to copy our strategy.