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Ahead of changes, KiwiSaver popularity rises

Monday 16th May 2011 4 Comments

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KiwiSaver is the third most popular investment class in the country, with 12% of New Zealanders believing it offers the best rate of return, according to the latest ASB Investor Confidence Survey.

KiwiSaver came in at joint third with bank savings accounts, behind term deposits in first place with 19% and rental property at 15%.

"Over the past year KiwiSaver has climbed from last place to third equal in return perceptions, the highest level yet," said ASB head of Private Banking and Wealth Management Jonathan Beale.

"Those expecting KiwiSaver to be their main source of retirement funding also reached a new high of 62% (up from 61% in Q4 2010), while respondents currently using KiwiSaver climbed 5% to 43% - another high."

"After almost four years of contribution from individuals, employers and the Government, investors are starting to sit up and take notice of KiwiSaver. Fund balances are growing, and the KiwiSaver scheme has proven to be a successful way of turning around the poor savings habit of many New Zealanders."

Beale said he believed there will be a change in investors perception of KiwiSaver in the wake of changes to be announced in this week's Budget – which the Government has confirmed will include reductions to Member Tax Credits.

"However, we believe KiwiSaver is still likely to remain the most popular retirement savings vehicle for respondents in our survey," he said.

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Comments from our readers

On 16 May 2011 at 1:58 pm Eric Carryer said:
Hi iff John Key tampers with the Kiwi Saver we sighned up to the Natioal Govt must go
On 16 May 2011 at 2:17 pm G J said:
So what is the current / typical rate of return ? There was a woman on the radio last week that has authored books about Kiwisaver, and she said "the govt doesn't want to borrow from overseas to contribute to NZers' Kiwisaver"... So why would I want to (effectively) borrow against my (foreign bank) mortgage to invest in Kiwisaver ?? The govt can get far better bulk rates offshore than I can from my bank, and I'd rather reduce my debt sooner than have to save in what I consider a risky (govt can change anything at zero notice) savings scheme ? It is worse for NZ to be doing the offshore borrowing indirectly through homeowner mortgage accounts. Reduction in income tax was supposed to cover increase in GST ? But kiwisavers loose tax credits as well ? And, despite the published (supposed) inflation rates, most household bills are leaping as much as 17%, and water rates have joined the exponential curve after remaining static for many years. I don't have any spare disposable income to put into kiwisaver. I was not in a position to take advantage of provisions for first home buyers (had already bought this first home, on a low budget). Although I've been the earner for a single income family for years, I've not been allowed to split income with my wife for tax purposes, and NOR (it appears) will they give me WFF tax credits.
On 16 May 2011 at 4:07 pm Tony Fleming said:
The return on Kiwisaver, as far as unit prices are concerned, in in many cases no better than any other managed fund available in New Zealand i.e. your money is invested in the same asset groups (cash, fixed interest, shares etc.) What makes (or rather made) Kiwisaver attractive over other schemes was the INCENTIVE provided by the $1000 kick-start and the (up to ) $20/week tax rebate. That provided in a best case scenario a guaranteed return, even if the unit prices went into the negative. remember too that the money we invest may well have had income tax payed on it already. There is still PIE tax subtracted from your account so presumably the Government gets something back still - a second chance to tax you. Also it would be better to get rid of any debts e.g. mortgage, credit cards etc. because the interest you are paying on those far outweighs that which you will make in a managed fund/PIE.
On 18 May 2011 at 9:32 am Karl Oliver said:
KiwiSaver is the third most popular investment class in the country,- This shows that may new zealanders dont really understand investing. I have some money in shares such as argosy gmt kip and npt and all of these are giving returns of 7% + tax paid because they are PIE investments. Even through the hard time they continue to pay good dividends the returns better that most Kiwi saver funds. I suspect most people in the street would have no idea what a PIE entity is.
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