This year, for the first time, the Melbourne Mercer Global Pension Index, which benchmarks retirement income systems around the world, included New Zealand in the report - issuing an overall "B" rating.
That’s actually an OK performance (no country received an “A” rating) and New Zealand performed well when it came to the integrity of the system and government. But it was let down by the adequacy and sustainability assessment section, getting a combined rating of 67.4 (out of a possible 100), placing New Zealand in 9th place overall. This means there is plenty of room for improvement and the report recognized the following areas of focus that could increase future scores:
There are currently about 2.8 million people signed up to Kiwisaver in New Zealand who have, collectively, invested $40 billion into the various schemes. However there are still 500,000 working-age people that are not registered, with many who are registered in the scheme not contributing anything to it, and many more are set to default contribution and investment settings, meaning that their future savings potential is far from optimized.
Recently the New Zealand Financial Market Authority (FMA) discussed it’s disappointed with the level of personalised financial advice, specifically for KiwiSaver members, referencing a 2015 report that found just one in a thousand people getting tailored advice when joining or switching a Kiwisaver scheme. The FMA also recently refreshed it’s strategic outlook and identified rapid technological change as an emerging theme that it needed to be prepared for and last year the government also announced proposals to reform legislation governing financial advisers in an effort to streamline the different types of advisers and advice
If you are a Kiwisaver member you are entitled to know what's going on with your funds, and get access to the right kind of financial advice to decide what type of fund is best for your personal savings or retirement goals. These default Kiwisaver accounts were never intended to be permanent and the timing is now right to make your next move.