KiwiSaver

More than a third of New Zealanders would be willing to use money from their KiwiSaver accounts to pay for advice on what to do with it, ANZ research shows.

An ANZ survey of 700 people found more Kiwis plan to leave their KiwiSaver savings where they are when they hit the pension age.

Just  27% of them intended to withdraw all their money from KiwiSaver once they turned 65, down from 35% in November last year.

Of those people planning to withdraw all their KiwiSaver money, 48% intended to reinvest their money in a term deposit, compared with 53% in November.

ANZ managing direction retail and business banking and wealth John Body said the current low interest rate environment was making it more attractive for people to leave their money in KiwiSaver.

“More people say they plan to leave their money in KiwiSaver and fewer people are planning to invest their funds in term deposits.

“While the current low interest rate environment is great for borrowers, it’s a tough situation for savers.

“It’s becoming more attractive for over-65s to leave their money in KiwiSaver, continue to earn investment returns and still be able to access their money at any time,” he said..

Body said the survey showed a large number of people – 52% – had no idea what they’d do with their KiwiSaver money once they reached 65: “Young people today may need their retirement savings to last for 30 years or more so it’s important to have a plan to make good use of your savings.”

Britain recently moved to allow people to withdraw up to 500 pounds from their pension savings to pay for professional financial advice on how to manage their retirement savings.

The ANZ survey found that 36% of New Zealanders would be willing to withdraw up to $1000 from their KiwiSaver to pay for independent financial advice to develop a financial plan for retirement.

Body said that as people got older, they were prepared to pay more for financial advice while younger, less affluent people were prepared to pay only a small fee.

More conservative KiwiSaver schemes are starting to get their chance to shine.

After a number of years where growth and aggressive schemes were the outperformers, a period of sharemarket volatility has seen the balance tip back in favour of those invested in less risky assets.

Morningstar has released its survey for the quarter ended March 31.

It found funds with a tilt towards defensive assets outperformed growth funds in the quarter. Average returns were positive across the board, ranging from 0.79% for the aggressive category through to 2.65% for the moderate category.

“Despite a volatile first quarter in global markets, most KiwiSaver funds delivered positive performance, with more conservatively-oriented options in particular doing well,” Morningstar Australasia director of manager research Tim Murphy said. “Strong returns from bond markets, coupled with the local sharemarket’s resilience, meant that most KiwiSaver investors’ retirement savings continued to grow.”

Fixed interest returns were strong across the board, as global bond yields generally fell over the quarter, while another unexpected cut to the OCR in March was a further positive for local bond performance.

In equities, New Zealand was one of the strongest performing markets in the world in the March quarter, benefitting funds with greater exposure to domestic stocks. Australian equities weren’t as strong, despite the rebound in commodity prices, while most international equity exposures delivered negative returns for the quarter.

Aon Russell KiwiSaver Scheme was again a standout performer in most of its categories. Aon’s outperformance is due primarily to its low exposure to growth assets.

Kiwi Wealth KiwiSaver had a tough quarter, with all its multi-sector funds sitting at the bottom of their respective peer groups. Kiwi Wealth has no exposure to Australian or New Zealand shares.

Over a longer term, Aon KiwiSaver Russell and ANZ KiwiSaver were at or near the top of most categories and were the most consistent performers across the board. Mercer KiwiSaver continues to be a top performer within the conservative category, while Milford KiwiSaver comfortably tops the balanced category over the long term, despite a weaker quarter.

Three-quarters of all KiwiSaver members have no idea how much money they will have in their accounts when they reach retirement, a new survey shows.

The survey of 781 members, commissioned by Kiwi Wealth, shows 77% of people do not know what their account will be worth when they hit 65.

But more than half estimate they will need between $400 and $600 a week to live on, after tax.

Another 27% did not know what type of fund their KiwiSaver account was in and 31% had never reviewed it. Women were more likely to have not made any changes.

Almost 40% of those aged under 25 did not know who their provider was.

More than 60% expected to get NZ Super when they retired.

Joe Bishop, Kiwi Wealth head of retail wealth and marketing, said there was a large gap between people’s retirement income expectations and the amount they needed to save to achieve it.

“For an initiative designed to encourage retirement savings, it’s alarming that 77% of KiwiSaver members don’t know how much will be in their account when they retire.

“It’s likely that many are seriously overestimating how much it will be, and seriously underestimating how much they’ll need to have the retirement lifestyle they hope for,” he said.

“Half of the KiwiSaver members surveyed thought they would need $400-$600 a week to get by when they reach retirement age. Massey University research shows that even for a ‘no frills’ retirement, someone living in a metropolitan centre will need $490 a week.

“Current New Zealand Superannuation for a single person is around $370 a week, so there is a shortfall that needs to be bridged by KiwiSaver.”

He said the survey showed many members were not taking enough action on their KiwiSaver accounts and could be missing out on money in retirement.

“The prevailing sentiment appears to be that many people approach their KiwiSaver accounts like bank accounts when they should be thinking about them as investments. Many of these accounts are lying ignored in default funds which may not be performing as well as other funds more aligned to the customers’ risk profile and investment timeframe.

“Too many KiwiSaver members are short-changing themselves.  They need to be more involved with their investment and make informed decisions,” Bishop said.

“The onus, too, must be on KiwiSaver providers to engage more with their customers and help them make good decisions for their investments.  That’s the best way for KiwiSaver members to increase their wealth.”

Pie Funds is shelving plans to launch a KiwiSaver scheme, for now.

It had been reported that the fund manager was working on a KiwiSaver scheme to launch this year.

The Australasian small-cap specialist manager had said it wanted to get enough funds under management before launching the product.

But head of client services Sam de Court said that had now been put on the back-burner.

“We haven’t decided not to do it but we’ll put off planning until 2017. We’re quite busy growing the business at the moment.”

He said Pie Funds had decided to focus on its other areas of growth. “KiwiSaver would be a huge undertaking and we don’t need that distraction.”

Pie has grown its funds under management from $200 million in 2015 to $350 million today.

Last year, Pie launched a new fund, Growth 2, which focused on small and medium-sized Australasian companies that offer value and growth.

It had been reported that fund was something that a Pie Funds KiwiSaver scheme could invest into.

But de Court said it made sense to focus on that fund and other areas of growth in the business for the time being.

Pie Funds’ best performing fund in 2015 was its Emerging Fund, which returned 41.7% over the calendar year for the $56.3 million invested.

That was followed by its Growth Fund, which returned 24.7%  but is up 337.5% since inception.

Newcomer Growth 2 is up 9.7% since its inception and down 1.6% month on month. It returned 14.1% through 2015 and has $40.5 million invested.