A personal finance columnist for the NZ Herald

Inside Money: Underage saving - how to recruit KiwiSaver kids

Photo / Thinkstock
Photo / Thinkstock

The IRD has taken to presenting its monthly KiwiSaver statistics in graph form rather than tabular lists of raw numbers.

As pretty as the new graphs look, if, like me, you prefer the numerical version the IRD also supplies the data in an excel spreadsheet.

But either way you look at it, there doesn't appear to be much exciting going on: with the exception of the payments section, which spikes dramatically when the government pays the bulk of 'member tax credits' in July, the graphs are virtually flat-lining; the numbers are boringly consistent.

"...there's also a fair degree of pushing going on from providers and their representatives - not all of it strictly kosher."
David Chaplin

Just possibly, there's a slightly interesting downward trend in the number of people opting out of the auto-enrolment process, matched by an upward-sloping line of members exiting to retirement.

But KiwiSaver isn't quite a steady-state universe; it's slowly expanding, inflated each month by a very regular influx of new members. According to the IRD number, net KiwiSaver members grew by about 15,000 each month since July last year (ranging from a high of almost 22,000 from July-August 2013 to a low of roughly 13,000 over November-December).

As the graphs show, each of the five age cohorts measured by the IRD appear to be growing at a similar rate, which is not surprising.

A closer analysis of the numbers, however, reveal children (0-17) make up a reasonably large proportion of the 'actively enrolled' members.

Based on the latest monthly figures, from December 2013 to this January, an additional 17,611 net new members joined KiwiSaver. Of these, 7,101 were auto-enrolled and 833 joined via their employer's default scheme - leaving 9,677 members who made an 'active choice' of KiwiSaver fund.

Over the same period 2,515 children joined KiwiSaver, which represents over 25 per cent of those who made an active choice (kids, not many - if any, won't be in the auto-enrolled or employer fund sectors). How 'active' the children's choice is, however, remains moot.

Certainly, the $1,000 'kickstart' does work as an enticement for parents to enrol their kids. But there's also a fair degree of pushing going on from providers and their representatives - not all of it strictly kosher.

For instance, a couple I recently spoke to who had just signed up their two children to KiwiSaver were shocked when I informed them the annual tax credit (which tops out at $521) didn't kick in until members turn 18.

Apparently, the credit union teller had told them otherwise, which had influenced the sign-ups and decision to contribute regularly on behalf of their children. The end result may not be so bad, but we should expect by now a higher standard of knowledge from the legions of bank/credit union staff 'advising' on KiwiSaver - of course, my sample of two may not be statistically significant.

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A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. He is the editor of industry website Investment News. David has edited magazines and websites for the financial advice, investment and superannuation industries.

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