There has been a decline in the understanding of the KiwiSaver scheme, according to the latest ASB KiwiSaver and Investor confidence survey.
The report shows just 22% of New Zealand respondents have a high understanding of the retirement scheme, compared to 26% in the last quarter.
According to ASB senior wealth economist Chris Tennent-Brown, the decline could be for a couple of reasons. It could be a one-off observation, or it could be due to the fact there was a pretty volatile start to the year for investments.
“The difference between 2018 so far and 2017 has been the return of volatility in financial markets,” Tennent-Brown explained. “The volatility has impacted KiwiSaver balances, and in the times when the news headlines have been dramatic, it seems to have spurred more people to seek information about what’s going on.”
However, Tennent-Brown noted that this decline in the level of understanding is “disappointingly low for a scheme that is 10 years old now, and for a scheme that is a key retirement savings vehicle for many people.”
On the contrary, the economist mentioned positive changes in customers’ behaviour with an increasing number of people engaging with ASB about KiwiSaver. ASB had 60,000 in-depth conversations with New Zealanders in the last 12 months specifically about KiwiSaver. The vast majority wanted and take guidance from the bank when selecting their fund or deciding how much to contribute.
The report also suggests an increase in the number of respondents (65%), who use KiwiSaver to save for their retirement. Yet, despite this high usage and KiwiSaver being the country’s main retirement scheme, personal homes (20%) and rental properties (17%) continue to be seen as the investments that provide the best returns – well ahead of KiwiSaver at 11%.
“People’s confidence in property is unwavering,” Tennent-Brown said. “It’s understandable based solely on historical returns, but right now it’s somewhat surprising, considering all the uncertainty circling around property regarding the Government’s tax review, policy changes and lending restrictions impacting the market.”
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