A survey by the Commission for Financial Capability (CFFC) for World Investor Week this week found that 28% of those enrolled in KiwiSaver did not know whether their fund was in the conservative, balanced or growth categories. The “Don’t Know” box was ticked by 34% of women and 20% of men. There are 2.9 million members of KiwiSaver, meaning those who don’t know their fund type are estimated to number more than 800,000.
The different returns from different types of funds can be in the tens of thousands of dollars across a working life.
Peter Cordtz, Community Education Manager at the CFFC (above), said the first thing many people did not know about KiwiSaver was that it was not just a savings plan. “It’s an investment scheme to help you prepare for retirement. If we set and forget it we’re losing out.”
When asked if they knew how much they were contributing to KiwiSaver each payday, 17% of the survey’s 4000 participants didn’t know – 19% of women and 14% of men – which equates to nearly 500,000 New Zealanders. Contribution rates are 3%, 4% or 8%.
About 350,000 people, or 12% of KiwiSaver members, do not know how much they have in their accounts.
When asked if they received the annual government contribution of $521, called the Member Tax Credit, in the past year, 28% didn’t know – 31% of women and 25% of men. Ten per cent were not aware the government contribution even existed. The government pays members 50c in every dollar they contribute up to $521 each year between July 1 and June 30.
“It seems too many of us are passive participants in our preparation for retirement,” said Cordtz. “Life isn’t Lotto – you can’t just leave everything to chance and hope for the best. KiwiSaver is something you can control through choosing the right fund type for you, choosing the highest contribution rate you can afford, and making sure you qualify for the Member Tax Credit each year.”
Cordtz added that retirement planning was not just about looking after yourself in your later years, but also your family. “It’s about the quality of their time with you in those years, when you shouldn’t have to worry about money.”
Cordtz said a good place to start getting to know your KiwiSaver was at the KiwiSaver Guide on sorted.org.nz