Happy Birthday KiwiSaver
By Carmel Fisher, Director
30 June, 2017
KiwiSaver is ten years old. How's your first KiwiSaver decade been? Has it lived up to expectations?
I can tell you that as a KiwiSaver provider, our expectations have been blown out of the water, as have those of the Government and Treasury. New Zealand's retirement savings scheme has been embraced by far more Kiwis than ever imagined, with KiwiSaver members amassing more than $41 billion in retirement savings to date.
In the Fisher Funds KiwiSaver schemes alone we've earned more than $1 billion (after fees) for our members.
I remember having reservations when the idea of KiwiSaver was first mooted. While the Australian superannuation scheme was very successful, I wasn't convinced Kiwis would embrace such a savings scheme.
As savers and investors we tended to be somewhat conservative, and we preferred houses and bank deposits over managed funds and share market investments.
Still, the Government ensured there were enough features to make joining KiwiSaver virtually a no-brainer.
To quote a Sunday Star Times article from April 2007:
"Who should open a KiwiSaver account? Everyone. There's a $1000 sweetener for every new account opened. Okay, savers don't get the money until age 65, but by then compound interest would have been at work.
People aged 60 to 65: They're near to retirement, and so should be saving like billy-o anyway, so not claiming the free $1000, which they'll get their hands on in five years or less, would be criminal.
Children: Yes, they too can have a KiwiSaver account, and damn well should, though parents will have signing rights. Why not get them that $1000 while it's there to be had.
Young-uns starting out at work, but aiming to buy a home later: After three years, Kiwisavers who don't own a home will be able to withdraw their contributions to help with a deposit. Parents, don't let your kids mess this up. Open them an account, so their inaction won't shut them out of this opportunity when they most need it.
People whose bosses will chip in free money: When was the last time you turned down an offer of free money? I suspect the answer is: "Never did, never would".
The financially illiterate: What better way to learn about the markets and investment than dipping a toe in the water through a well-diversified fund, drip-feeding money into the markets over time."
This article was prescient; I have spoken to many KiwiSaver members over the years who've benefited from the $1000 kickstart (which unfortunately is no longer available), the home deposit boost, the employer contributions and the ability to learn while they earned.
More than that though, they've become accustomed to a portion of their earnings being diverted into a long term savings scheme that they can't access. KiwiSaver has helped a lot of people become committed savers, when they may not otherwise have been.
And judging from the questions and conversations that we enjoy today — compared to ten years ago — a lot of people have learned about financial markets and money concepts, which sets them up well for their future in KiwiSaver, and beyond.
Not everything introduced in the last ten years has added to our lives; in fact there are multiple temptations today to lure us away from our long term savings goals.
But KiwiSaver is doing its job well. We talk to happy KiwiSaver members every day. Let me tell you, that enthusiasm is relatively rare in the staid financial services industry.
Happy tenth birthday KiwiSaver; you're doing good.