An average of 32,000 new members have joined Kiwisaver each month in the last year. That’s an impressive growth rate of 54% over the last 12 months, exceeding most peoples expectations. At current growth rates by 2015 (in just five years) Kiwisaver funds under management are predicted to have reached the same level as retail funds, however there is still plenty of room for growth. Out of the 3.8 million New Zealander’s eligible to join Kiwisaver, so far only 1.2 million or 34% have signed up. Or to look at it another way there are still 66% of eligible New Zealanders missing out on the long term benefits that come from preparing themselves for retirement one day. From as early as 2012 Kiwisaver members will start to become eligible to receive their savings, and that is when they will be looking for high quality advice and service.
As you would expect the 45 – 54 and the 55 – 64 age groups have the second highest take up rates at 211,000 and 224,000 members respectively, after all they are the closest groups to retirement. Surprisingly though there are still over half a million eligible members above age 45 who so far have not taken any action at all.
Kiwisaver members seem to be spoilt for choice with 30 providers currently offering up to 52 Registered Schemes, (including 27 options built into existing superannuation schemes) and several more set to join the party. The industry does expect some consolidation through 2010 though, with two providers apparently having already signalled that they will be exiting the industry. Provider costs have apparently soared and unless you have scale, profitability will become an issue.
The banks and large fund managers seem to be leading the funds under management race with ING (including ANZ and National Bank) top of the tables at $1.047 billion in funds under management followed by ASB, AMP, BT (including Westpac), AXA (including BNZ) Tower, Mercer, and Fisher Funds.
Employers too have been playing their part with nearly 18,000 employers having elected preferred providers for their staff. Scheme transfers seem to be on the increase and present an ongoing challenge for providers.
Looking forward we believe Aussie super scheme portability will likely to appeal to many expatriate New Zealander’s wishing to consolidate their retirement provisioning back home. Providers may look to expand current product offerings by adding on possible options such as annuities and other alternative investment choices and retirees will be wanting to establish relationships with professional advisers so they can access quality advice from a trusted source.
