Research reveals engagement with scheme
New research has revealed the number of KiwiSaver members reading their annual statements has lifted to a record high of 80%.
The majority of KiwiSaver members also say continuing their contributions is a priority.
The Financial Markets Authority (FMA) has released its annual KiwiSaver Statements research which seeks to understand member engagement with annual statements for the voluntary retirement savings scheme.
The report found only 21% of KiwiSaver members thoroughly read their statements, while 59% briefly read them, meaning an overall readership rate of 80%. This compares to 76% in 2020, 78% in 2018 and 79% in 2016.
The research also found 59% of members say ongoing contributions are a priority despite recent market volatility – similar to the previous survey result of 62%. Additionally, 58% are confident in the long-term prospects of KiwiSaver.
FMA manager of investor capability Tammy Peyper (pictured above) said the rate of statement readership was reinforced by overall KiwiSaver engagement.
“There was 63% of members who say they typically check their balance at least once a month and this includes 19% who check their balance weekly or more often,” Peyper said.
“This high level of engagement is likely influenced by two-thirds of members having their KiwiSaver with a bank, which means they may regularly see their balance when logging in on a banking app. We want members to stay engaged with their KiwiSaver but there is a risk that investors could react to short-term fluctuations.”
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Peyper said it was heartening to see most KiwiSaver members were staying the course through turbulent markets.
“Kiwis are optimistic about the long term, however, the difficult and uncertain economic climate has shaken some members and likely had an impact on what some feel they can afford to contribute.
“The proportion of members who said they cannot afford to make changes to their contributions increased from 42% to 51% and 35% said they were shocked by the change in their fund’s value, up from 26% previously.”
Peyper said more KiwiSaver members were taking note of their estimated projected lump sum upon reaching the age of 65.
“Your KiwiSaver statement is a decision-making document and the projected lump sum is a helpful indication of whether you are on track for your retirement goals,” she said.
“We are pleased to see more members are noticing this important aspect of their statements with half of them intending to act. The most common response was to increase contributions, which is a promising sign because your contribution rate is a major influence on your lump sum.”
Read next: How do Kiwis invest during volatile economic times?
Peyper said it was slightly concerning that fewer people were happy with their retirement balance projection.
“The proportion of members who think it was around, or more, than they were expecting has dropped from 62% to 53%,” she said. “But the point of the projection is to get people thinking now as decisions in the short-term will have long-term impacts.”
Peyper said members’ attitudes towards fees remained consistent with previous years – 53% said fees were “about right” and 30% said fees were too high.
“Investors’ perceptions of value for money are primarily driven by low fees and fund performance, so it is unsurprising that in a year of lower returns investors report experiencing less value,” she said.
“Members in conservative funds likely saw their investment returns go backwards in this year’s annual statements, so this may have influenced their perceptions of value for money, particularly as fees are still applied. Similarly, those on lower household incomes are also less likely to believe they are getting good value for money.”
