Inside Money: KiwiSaver turn-off high in kickstart-less world

There's been a surprising slump in KiwiSaver sign-ups, says the ANZ. Photo / Thinkstock

Sign-ups have dropped by more than half following the $1,000 kickstart deletion last month, the nation's biggest KiwiSaver provider, ANZ, reported this week.

John Body, ANZ head of wealth, was somewhat surprised by the scale of damage the government budgetary move has inflicted on enrolment rates.

"We thought we would see a fall but not to that extent given the kick-start only makes up a small percentage of the final balance," Body told me. "Our view is KiwiSaver is a good solution for NZ inc and the more it changes the less confident people are in committing to this as their retirement savings platform."

An ANZ survey of 1,200 people conducted in June illustrates the significant drop in KiwiSaver confidence.

Under the hopeful heading of 'Don't give up on KiwiSaver', the ANZ release included survey results showing that over 60 per cent of people not yet in a scheme were less likely to join post kickstart removal.

"The ANZ survey also found that around 40 per cent of people were less confident about the future of KiwiSaver as a result of the change, with 52 per cent of people saying they were concerned the Government would make other changes to KiwiSaver in the future that would affect their savings," the ANZ statement says.

In due course, the free $1,000 may fade into urban legend status but, based on the ANZ figures, the kickstart cut-off has tarnished the KiwiSaver brand considerably.

In due course, the free $1,000 may fade into urban legend status but, based on the ANZ figures, the kickstart cut-off has tarnished the KiwiSaver brand considerably.

The ANZ findings are likely to be reflected in the broader KiwiSaver industry. As the blue bank has captured more than a quarter of the KiwiSaver market "we are a reasonable proxy" for the industry, Body said.

And it's not just the kid factor driving the KiwiSaver aversion rate. According to IRD statistics, under-18s (who are not eligible for the annual $521 member tax credit top-up) made up just under 10 per cent of new enrolments over the 12 months to the end of May - while ANZ has seen new member enrolment drop by more than 50 per cent.

Taking away the $1,000 has clearly dissuaded plenty of adults from signing on too.

All this may be moot if the government does introduce an 'auto-enrolment' process to corral the lazy rump population into KiwiSaver. But as the opt-out is likely to remain in place, total membership growth from a mass-enrolment programme - without a $1,000 kicker - could surprise on the downside.