KiwiSaver

ANZ is calling on other employers to do their bit to help women achieve better outcomes through KiwiSaver.

The bank announced yesterday that it would continue to pay employer contributions to its employees’ KiwiSaver accounts while they are off work on parental leave.

ANZ general manager of human resources Felicity Evans said the move was part of its Wise Women campaign, which aims to raise awareness of the imbalance between men’s and women’s retirement savings outcomes.

The bank says Kiwi women retire with about $60,000 less than men, on average.

Evans said: “We have done this because we do not want our staff to be penalised for taking time out to raise families. This is a first for New Zealand and we hope it encourages other companies to also consider how they can support their employees in saving for their retirement.”

ANZ has more than 9000 staff, with about 200 on parental leave at any one time. It provides 16 weeks of parental leave on full pay and will increase that to 18 weeks from next year, topping up the paid parental leave available from the IRD.

The median net worth of women aged 45 to 64 is $146,100, compared to $167,300 for men of the same age.

At retirement, ANZ estimates women will have an average $144,000 to last them just over 20 years. Men will retire with an average $203,000 to last 17.3 years.

The average balance for women in the ANZ KiwiSaver schemes is just under $9000, 28% less than the male average. Two years ago, the gap was 26.5%.

ANZ general manager of wealth products and marketing Ana-Marie Lockyer said the type of fund women chose could also affect their outcomes.

Only 10% of women surveyed said they did not mind higher volatility if it meant better returns over time: “More women than men are in our conservative funds and this can have a big impact on financial outcomes over the long term. The maths shows that women could be $90,000 worse off by remaining in the conservative fund over the long term,” Lockyer said.

The KiwiSaver top-up applies to any ANZ staff taking parental leave from October this year.

Retirement Commissioner Diane Maxwell welcomed the move. “This is the kind of innovation that shows what a key role employers can play,’ she said.

Morningstar has given silver ratings to a range of AMP KiwiSaver funds.

It awarded the rating to its aggressive, growth, moderate balanced, moderate, conservative and balanced funds.

It is the second year AMP KiwiSaver funds have received silver ratings.

Bronze, silver and gold ratings indicate the level of conviction Morningstar has in recommending a fund. It can also rate funds neutral and negative.

Morningstar said AMP KiwiSaver has one of the most impressive multisector investment teams in the market.

“Although performance has gotten the wobbles in recent years, we continue to believe the team will deliver long-run risk-adjusted returns that better most peers,” analyst Elliot Smith said.

Morningstar recently gave neutral ratings to ASB’s balanced, conservative, growth and moderate funds.

Smith had praise for Peter Verhaart, head of AMP’s New Zealand’s multi asset group.

“Verhaart is supported by head of investment strategy Keith Poore and chief economist Bevan Graham, they form an accomplished partnership. Verhaart is focussed on strategic positioning and manager research, while Poore concentrates on dynamic asset allocation and Graham on macroeconomics. Their deep investment thinking and grasp over the investment process induces confidence.”

He said AMP had a focus on long-term returns and could be less opportunistic than other managers.

Advisers whose clients are worried about the possibility of a market correction should encourage them to stick with the KiwiSaver fund they are in, new research shows.

Actuarial firm MJW has released a report looking at the impact of a market correction on KiwiSaver funds.

It says booming stock markets over recent years have sparked concerns of a major market correction in the near future.

“A risk identified is that members in a growth option or similar will suffer a significant negative return, causing them to switch to a more conservative option and then sit in this fund in future, suffering further reduced returns as a result.”

The firm compared two hypothetical funds: a growth fund with 80% in growth assets and a conservative fund with 20% in growth assets.

It used employee members earning $70,000, who started saving in 2007.

It assumed a market correction starting October 1, resulting in 27% losses for the growth fund and 9% for the conservative.

In that situation, the correction reduced the growth fund by $14,000 to $43,000 and the conservative balance by $2000 to $47,000.

“While the growth KiwiSaver member emerges from this correction in a worse position, the momentum it had already built up in the years leading up to it means its position is not markedly worse off than the conservative member who was shielded from the brunt of the loss,” the report said.

The growth fund’s balance would then overtake conservative again in 2019 and accelerate away as time went on.

MJW said members who chose a more aggressive investment style should be focused on the long term and wait out any correction that occurred.

Actuary Mark Weaver said investors who were worried about the possibility of a downturn should be told it was better to stay where they were because timing the market accurately would be next to impossible. “If you switch and markets do fall, when do you switch back?”

He said growth investors could lose money in the short term but would still come out ahead in the long run.

New Zealand’s falling dollar made the biggest difference to KiwiSaver members’ account balances over the most recent quarter, research firm Morningstar says.

It has released its latest KiwiSaver survey, to June 30. Over that period, the New Zealand dollar fell in value by just over 8% against the US, 12% against the Euro, 9% against the Australian, and 13% against the British pound.

KiwiSaver funds with more exposure to growth assets performed more strongly than conservative funds again in the quarter.

Morningstar said that did not necessarily mean the growth assets themselves performed better but that currency exposures within conservative funds are usually fully hedged so were not affected by the falling New Zealand dollar. The median aggressive fund returned 2.85% for the quarter, while the median conservative fund returned 0.38%.

Forsyth Barr and Generate were the top performing aggressive and growth funds. Generate was also top of the moderate category and Kiwi Wealth topped the conservative category.

Tim Murphy, director of manager research, said the drop in the dollar had come as a bit of a surprise, given how strong the dollar has been lately. “The benefits of that have been seen in funds that have unhedged foreign exposure.”

But he said that did not mean KiwiSaver members should rush to change to funds that were exposed to the falling currency. “You shouldn’t make a decision on your KiwiSaver investment on the basis of one particular factor. You’ve got to ascertain what’s the appropriate risk profile, then compare the different options and providers. There is no one magic solution.”

In the past, Morningstar has been critical of the fees charged by conservative funds and Murphy said they had not changed.

He said KiwiSaver members could see a drop in funds as assets under management grew and managers had more scale to work with. He said how much the managers would try to hang on to increasing margin and how much they might pass to members would remain to be seen.

Meanwhile, Morningstar analysts say pockets of value are returning to the New Zealand sharemarket.

Asia-Pacific consumer sector head Daniel Mueller said stocks were trading in line with fair value estimates after a market pull back in the most recent quarter.

He said Contact and Genesis Energy were both trading below fair value. Ryman Healthcare and Fisher and Paykel Healthcare were two high-quality stocks with strong growth prospects trading close to fair value. Mueller said low-risk New Zealand property stocks were a reasonable place for investors to be.

“I wouldn’t say there is lots of value but it looks now that they are fairly valued.”

The search for yield has pushed up some defensive stocks to levels that some analysts have described as overpriced but Mueller said they had started to come off a bit. “Over the last quarter they have pulled back a bit and there is a little bit of value.”

Spark had come off the boil after a number of non-core asset divestments and a subdued reaction to the half-year result.