KEY POINTS:
Parents are catching on to the benefits of enrolling their young children in KiwiSaver.
Thirty-seven per cent of parents have either enrolled their children or plan to have them enrolled by next year, according to a Colmar Brunton survey released this week by AMP.
Child enrolments are expected
to rise further as more parents realise their children can get a $1000 Government kick-start - without making any contributions.
AMP's manager of wealth management products, Tracey-Lee Pettifer, said many KiwiSaver providers let parents open accounts for their children without making ongoing contributions.
Children receive a $1000 lump sum from the Government, a $40 fee subsidy, but no tax credits until they start contributing. Compulsory contributions start when they get their first job.
AMP's twice-yearly survey of 500 people found 15 per cent of parents had signed their children up to KiwiSaver. A further 22 per cent intended to do so before next year.
Retirement Commissioner Diana Crossan said savvy parents saw KiwiSaver as a way of picking up $1000 for their child to use.
According to the Government's sorted.org.nz online calculator, a $1000 lump sum invested today will be worth $1484 in today's dollars in 18 years, even at a conservative rate of return.
Ms Crossan said KiwiSaver was the only New Zealand savings scheme that did not let parents access their children's savings.
"With any other savings product, the parent is a guardian and they can get it out," she said.
"Not that parents mean to, but I know of several parents who've told me they started a savings scheme for their child when the child was 3 or 2, and by the time they were 6 they needed a new washing machine and took the money out.
"The child is now 15 and they haven't [put the money back in]."
The Government does not keep figures on how many KiwiSaver members have been enrolled by their parents.
But as of August 31, 13 per cent (104,989) of members were under 18.
AMP head of investment strategy Dr Leo Krippner said the Government's advertising campaign appeared to be ironing out confusion about the scheme, with fewer people reporting KiwiSaver confusion than in February.
The number of people who said they needed more advice before joining KiwiSaver has halved since February, from 42 per cent to 20 per cent.
More people are saving for their retirement - 62 per cent in August compared with 54 per cent in August last year. Fifty-one per cent of those saving for retirement said they were doing so through KiwiSaver - up 10 percentage points since February.