Power says the good news for investors is that the normalisation of interest rates will benefit returns on well-diversified investment portfolios.
He says he is worried that because of the cost-of-living crisis, policymakers are not prepared to have a discussion on the long-term retirement savings plan and what it will look like.
This is the right time to do it to help people think about what they might do with any discretionary income that comes their way when the economic cycle turns, he says.
“I have great confidence that New Zealanders are really smart and policymakers should not shy away from having conversations that are sophisticated and multi-faceted. They should not be short sentences and soundbites.”
Power says the KiwiSaver schemes and the New Zealand Superannuation Fund have reached a scale where they can have a smoothing effect on the cost of universal superannuation.
“We need to have a tripartite discussion on what retirement savings will look like. The construction of the conversation has changed because of the size of the funds.”
The NZ Super Fund has reached $76 billion in value, having posted a return of 14.94% for the year ending June.
KiwiSaver, introduced on July 1, 2007, has 3.25 million members who have invested nearly $100 million across 38 schemes.
Power says KiwiSaver came in with the broad idea of being used to smooth the cost of superannuation – and likewise the NZ Super Fund. Now they should play a significant rather than subsidiary role in the conversation. The discussions can include the settings for KiwiSaver.
Power arrived in his new role in February, after being chief executive of TVNZ. Before that, he was acting chief executive and general manager institutional and business banking with Westpac.
He represented Rangitīkei as a National MP for 12 years and was the Minister of Justice, Minister of Commerce, Consumer Affairs and Deputy Leader of the House in the 2008-11 term.
Power says it’s more important than ever for New Zealand to press its case on the global stage.
“If you look at the US election and the rise of de-globalisation and the unrest in Ukraine and the Middle East... these global events make it less certain and more volatile for an outwardly trading nation like New Zealand.
“Kudos to our Prime Minister [Christopher Luxon] for spending as much time as he can in other markets – that’s been the right thing to do. Our place in the global economy has to be more understood.
“Our Foreign Minister [Winston Peters] is also spending more time in the markets and is doing a good job. As a senior politician, he’s leapt into promoting our case on opportunity and flow of capital.”
Power says the Covid pandemic splintered social cohesion in this country. Where New Zealand previously had those advantaged and disadvantaged intersecting, these groups are now running parallel to each other.
“Strengthening the education system and the opportunities it offers can unlock this situation. Covid had a bigger impact on some parts of the New Zealand population than others, and we have to make sure the opportunity is there for everyone to tighten social cohesion.
“It’s pleasing to see core competencies such as maths in schools being put in place, and discussions about the role of tertiary education in trades training.
“We are starting get on the right track dealing with social cohesion but there’s more work to do,” says Power.
“To some extent, Fisher Funds is in the education game regarding financial literacy, because of its involvement with KiwiSaver. Financial education can be part of the discussions on the affordability of retirement settings.
“The idea that financial knowledge is to be shared remains one of our important principles and true to the core of founder Carmel Fisher,” Power says.
Fisher Funds is a sponsor of the Herald’s Mood of the Boardroom project.
