FMA KiwiSaver report shows members have built up total assets equivalent to 15% of NZ’s GDP
KiwiSaver members have built up more than $40 billion dollars in total assets, equivalent to 15% of New Zealand’s GDP, since the savings scheme was established 10 years ago, the Financial Markets Authority’s (FMA) annual KiwiSaver report shows.
The report is based on returns as at 31 March 2017, and shows total assets were up $7 billion from $33.8 billion in 2016. Investment returns of $2.7 billion were more than double those of 2016, and are close to the previous $3 billion record reported in 2015.
The members transferring between schemes continues to be a theme of the 2017 report, and is a key focus for the FMA. For the second year in a row, the number of transfers, 172,017, is higher than new members joining, 154,531. This trend is likely to continue, and the FMA states it remain concerned that people are not getting the help they need to ensure their decision to transfer to a new provider is a good one.
FMA Chief Executive Rob Everett said: “We have improved our guidance on KiwiSaver sales and advice to remove obstacles that prevent providers helping their members make good decisions about KiwiSaver.
“We have also partnered with providers on field trials to see if behavioural insights help them to better connect with their members. This is all part of pushing and encouraging providers to put solid effort into member engagement, ” Everett added.
The annual statement KiwiSaver members receive from March 2018 will, for the first time, show the dollar amount of the fees they pay. Research suggests this will help members understand their KiwiSaver fees more clearly.
The FMA has encouraged providers to also disclose fees as a percentage. This would make it easier for members to compare different KiwiSaver funds. Ahead of this, the report for the first time sets out the average fees per member in dollar terms. The average management fee per member was $97.80, reflecting an average balance of just under $15,000. The average administration fee was $30.30.
The report also updates information about what default KiwiSaver providers are doing to meet their responsibilities to address the financial literacy of their members.
Everett said the FMA understood that engaging with default members can be difficult. But the lack of progress in this area by the default schemes is disappointing. Especially when the income from fees paid by default members has increased to $31.5 million, and providers still seem to have little trouble engaging other providers’ members to get them to transfer.
We have written to the CEO of each default provider, seeking their commitment to meet their obligations to their default members. At the very least, we expect them to deliver on what they said they would do in their tenders to the government seeking default status. Or, if they have tried that and it didn’t work, to try something more effective,” Everett added.
Related stories:
Simplicity claims new fund “guarantees income for life”
Demand for KiwiSaver improvements
The report is based on returns as at 31 March 2017, and shows total assets were up $7 billion from $33.8 billion in 2016. Investment returns of $2.7 billion were more than double those of 2016, and are close to the previous $3 billion record reported in 2015.
The members transferring between schemes continues to be a theme of the 2017 report, and is a key focus for the FMA. For the second year in a row, the number of transfers, 172,017, is higher than new members joining, 154,531. This trend is likely to continue, and the FMA states it remain concerned that people are not getting the help they need to ensure their decision to transfer to a new provider is a good one.
FMA Chief Executive Rob Everett said: “We have improved our guidance on KiwiSaver sales and advice to remove obstacles that prevent providers helping their members make good decisions about KiwiSaver.
“We have also partnered with providers on field trials to see if behavioural insights help them to better connect with their members. This is all part of pushing and encouraging providers to put solid effort into member engagement, ” Everett added.
The annual statement KiwiSaver members receive from March 2018 will, for the first time, show the dollar amount of the fees they pay. Research suggests this will help members understand their KiwiSaver fees more clearly.
The FMA has encouraged providers to also disclose fees as a percentage. This would make it easier for members to compare different KiwiSaver funds. Ahead of this, the report for the first time sets out the average fees per member in dollar terms. The average management fee per member was $97.80, reflecting an average balance of just under $15,000. The average administration fee was $30.30.
The report also updates information about what default KiwiSaver providers are doing to meet their responsibilities to address the financial literacy of their members.
Everett said the FMA understood that engaging with default members can be difficult. But the lack of progress in this area by the default schemes is disappointing. Especially when the income from fees paid by default members has increased to $31.5 million, and providers still seem to have little trouble engaging other providers’ members to get them to transfer.
We have written to the CEO of each default provider, seeking their commitment to meet their obligations to their default members. At the very least, we expect them to deliver on what they said they would do in their tenders to the government seeking default status. Or, if they have tried that and it didn’t work, to try something more effective,” Everett added.
Related stories:
Simplicity claims new fund “guarantees income for life”
Demand for KiwiSaver improvements
