KiwiSaver has grown rapidly in the last few years with funds flowing in at record levels over the year to 31 March 2015 and withdrawals also at an all-time high, according to a report from the Financial Markets Authority (FMA).
Investment returns were the biggest component of positive fund flows and the report shows total assets in the KiwiSaver pool of retirement savings are up 33%, to just under $28.5 billion.
This is similar to last year’s growth and KiwiSaver funds now represent a significant portion of the nation’s wealth, equal to 12% of NZ GDP.
The report is based on the statistical returns of all scheme providers and shows that investment returns doubled from $1.5 billion last year to $3 billion in this year’s report.
KiwiSaver withdrawals for first home buyers were up 26% from $169 million in 2014 to $214 million this year and final withdrawals made by people over the age of 65 and who had been members for at least five years also increased steadily for the third consecutive year, up 12.7% to $422 million.
“Higher returns reflected an extended period of positive market conditions, which have peaked during the last 12 months,” says FMA director of markets oversight, Garth Stanish.
“However, those levels of positive returns are unlikely to be seen again for some time and investors need to be prepared for a period of lower returns and increased volatility ahead.”
Compulsory contributions from members increased to $2.38 billion for the year followed by employer contributions of $1.47 billion and Crown contributions of $927 million.
Nearly 200,000 new members joined KiwiSaver during the March 2014-2015 year, taking total member numbers to 2.5 million.