KiwiSaver options being passed up
New Zealanders are saving millions of dollars into KiwiSaver retirement schemes - but most appear to have no idea how their money is doing.
And experts say that means people are putting more comfortable retirements at risk by not maximising their interest-earning potential.
A Herald on Sunday survey of more than 100 people has revealed just 22 per cent of investors knew with any certainty how their scheme was performing. More worryingly, 16 per cent had no idea which company their retirement savings were with.
KiwiSaver has just passed the five-year mark. Some 1.9 million New Zealanders have signed up and investments top $12.8 billion.
Of the 105 people we surveyed in Auckland this week, just 12 out of the 55 people who said they belonged to KiwiSaver knew the interest rate their savings were earning.
The remaining 33 people - or 78 per cent - said the money disappeared from their pay packet but they had no idea if it was creating a big enough retirement nest egg. Worse, 9 of the 55 didn't know which company they were with.
According to the head of ANZ Wealth, John Body, a small difference in return over decades can have a big impact on savings.
Herald on Sunday Money columnist Bernard Hickey agreed. He said it was vital people knew where their KiwiSaver money was and how it was performing. A recent independent KiwiSaver report highlighted a wide disparity in performances of more than 40 schemes over the past five years, ranging from an 11.6 per cent loss to an 8.3 per cent gain.
Hickey, who now features a KiwiSaver fees and performance section on his website, said a grim 20-year outlook of low returns meant people needed to get interested in KiwiSaver performance and fees as it would determine the eventual size of their retirement savings.
New Zealand Herald columnist and best-selling KiwiSaver author Mary Holm said she was less concerned with the low level of knowledge of performance highlighted in the street survey.
"What's relevant is how they (funds) are likely to do over the longer period."
She said most people would be in KiwiSaver from between 10 and more than 60 years and if too much attention was given to short-term numbers, investors could end up making ill-advised decisions.
When they join KiwiSaver, people are put in a default scheme unless they nominate their own. Many of these take conservative investment options and experts believe younger people will make more if they change to moderate or high-risk schemes.
- additional reporting by Mahvash Ali
Couple use scheme to buy first home
Ryan Page (picture), 29, shifted into his first house on Auckland's North Shore this year thanks to his KiwiSaver scheme.
The Auckland business analyst and partner Rachael Wilson ended the uncertainty of renting after combining their personal KiwiSaver contributions with those of their employer to buy a property.
KiwiSaver is primarily a retirement plan but people can dip into their savings to buy their first home.
Page joined KiwiSaver within six months of it starting just under five years ago on his father's advice.
"It really helped us," he said. "It meant we got into the house a year earlier than if we hadn't had KiwiSaver."
Page had the financial savvy to know what his money could earn him. He said his KiwiSaver contributions were split between medium and high-risk funds over the past five years and had averaged around 6 per cent return each year.
This had grown to a level where the couple had saved half the deposit needed to buy the property and the rest was met through personal savings.
Page and his partner had resumed KiwiSaver contributions at a lesser rate but were now saving with retirement in mind.