KiwiSaver

New Zealand's financial services sector needs more action and less talk to help Kiwis get the best outcomes from their investments, one financial adviser says.

Authorised financial adviser John Cliffe spoke at the Retirement Policy and Research Centre and Public Policy Institute forum last week.

He said a lack of regulatory action had left many people on track to have less in their KiwiSaver accounts than they should at retirement.

Cliffe headed a group of AFAs who wrote an open letter to Financial Markets Authority chief executive Rob Everett, Finance Minister Grant Robertson, Reserve Bank Governor Adrian Orr and Commerce Minister Kris Faafoi highlighting problems with the KiwiSaver scheme.

He told the forum that the FMA had for too long taken too little action to ensure that default KiwiSaver providers were engaging with those who were automatically enrolled in their funds.

Too many people were stuck in funds that were too conservative for their investment goals.

“Ask yourself how and why did this happen? Conflicted interests. Term deposits for example make up more than 30% of most of the default funds.”

He pointed to data showing small numbers of people making active choices about their default fund investments.

He said the FMA could have done something about that earlier.

“I live in a world of action. So why didn’t the FMA just make some calls? Did the FMA have the power? Yes, they certainly did.”

Cliffe said all but the top three default providers should be stripped of their default status.

He said there was also a major and ignored issue of over-taxation.

Someone who should be on the 17.5% tax rate but was mistakenly on the top rate of 28% would end up overtaxed $109 this year and more next year. Someone who should be on 10.5% would end up paying an extra $181 this year.

Cliffe said it was too hard for members to have their correct tax rates loaded at present. "So not only are all default members automatically taxed at 28% so are all auto enrolled members."

He said, if the nine default KiwiSaver funds could not be properly managed by the FMA, it was questionable how it would cope with hundreds of financial advice providers.

Cliffe said financial education was needed.

“That’s the biggest thing we can do: teach our kids to be cynics [as well being financially literate]."

KiwiSaver provider Summer has launched two new funds to complement its Summer Investment Selection and My Plan offers.

Summer Investment Committee chair Martin Hawes said the new funds would be known as the Summer Conservative Selection and the Summer Growth Selection. The Summer Investment Selection has also been renamed the Summer Balanced Selection.

“The new funds will provide a broader range of Summer KiwiSaver scheme multi asset class options, at different risk levels, for those who prefer to leave the investment selection to us rather than choose their own combination through My Plan,” Hawes said.

The Summer Conservative Selection will include more cash and fixed interest investments with fewer equity and property investments. Members can expect a fund with low to moderate levels of movement up and down in value. The Summer Growth Selection will focus on more equity and property investments, members can expect moderate to high levels of movement up and down in value and to receive longer-term returns that are higher than those of the Summer Balanced Selection.

Summer offers members the opportunity to design their own customised KiwiSaver accounts, known as My Plan. Alternatively, they can choose the Summer Conservative, Balanced or Growth Selection which are funds made up of a mix of cash, fixed interest, equity and property investment. The Summer Investment Committee provides a general investment view to support asset allocation decisions.

“We have members who are active with their KiwiSaver accounts through My Plan but we also have members who just leave it to us. Either way, we encourage members to take charge of their KiwiSaver accounts and to make sure that they are making the most of their money”, Hawes said.

 

Sir Stephen Tindall is lending his support to not-for-profit KiwiSaver scheme Simplicity.

The businessman and Simplicity founder Sam Stubbs announced $1.5 million had been invested in Simplicity via K1W1, the Tindalls' seed and venture capital fund.

Simplicity says it is one of the country's fastest-growing KiwiSaver funds, with more than 22,000 members.

The money will be used by Simplicity to pay off debt and grow the business.

Part of the would include the development of a roboadvice platform, probably delivered by phone app.

Tindall will also become patron of the Simplicity Charitable Trust, the charity governing the KiwiSaver scheme.

Tindall said his values were closely aligned with Simplicity's.

"We both want a better deal for New Zealanders. I'm delighted that we can help Simplicity grow, and that I can personally be involved."

 

Sir Stephen Tindall is lending his support to not-for-profit KiwiSaver scheme Simplicity.

The businessman and Simplicity founder Sam Stubbs announced $1.5 million had been invested in Simplicity via K1W1, the Tindalls' seed and venture capital fund.

Simplicity says it is one of the country's fastest-growing KiwiSaver funds, with more than 22,000 members.

The money will be used by Simplicity to pay off debt and grow the business.

Part of the would include the development of a roboadvice platform, probably delivered by phone app.

Tindall will also become patron of the Simplicity Charitable Trust, the charity governing the KiwiSaver scheme.

Tindall said his values were closely aligned with Simplicity's.

"We both want a better deal for New Zealanders. I'm delighted that we can help Simplicity grow, and that I can personally be involved."