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KiwiSaver annual statements are being read but not acted upon

Page last updated: 6 Jul 2016

Media release
MR No.2016 – 17
6 July 2016

Most KiwiSaver members are reading their annual statements but only a quarter of them check to see if they’re on track to meet their retirement income goals.

The Financial Markets Authority has today released the results of a survey conducted in May this year, to coincide with the time when most KiwiSaver investors are receiving their annual statements. The survey was responded to by 1,313 KiwiSaver investors, two thirds of the total sample.

According to the survey, 21% of members had read their KiwiSaver statement thoroughly, and 58% had briefly looked at it.  However, only 23% of members reported having checked to see if their KiwiSaver account was on track.

Paul Gregory, FMA director of external communications and investor capability, said that the annual statement should be an important trigger for members to think about what they are saving and investing for. “When this arrives through your letterbox, or in your email, it’s a great opportunity to check in with your goals. And, if you’re not happy, to check in with your KiwiSaver provider. When you look at your statement, ask yourself some important questions:

  • Do I know the income I’d like to have in retirement, and the number I need to get to?
  • Given my current contributions and what fund I’m invested in, am I on track to hit that final number?
  • If I’m not on track, what’s in the way? Am I contributing enough? Am I paying too much in fees? Are the returns I expected not being delivered? Are my goals actually reasonable? Is it some or all of the above?

David Boyle from the Commission for Financial Capability (CFFC) said, “It’s a pleasant surprise that so many people are reading their statements.  But it’s clear from this survey, and from CFFC’s own work, that more could be done to make these documents of greater use to KiwiSaver members. We’re also concerned that 73% haven’t checked they are on track for their retirement needs.”

The FMA’s survey results strongly suggest what additional information on the statements might assist more KiwiSaver investors to use the document as a decision-making tool:

  • 72% of respondents said they would like to see information about the lump sum they were on course to receive when they retired;
  • 62% said they would like to see what weekly income that lump sum would deliver in retirement as they drew it down; and
  • 37% said they would like to see the fees they paid expressed in a dollar amount, echoing a recent survey by the Commission for Financial Capability (CFFC) where the positive response was even stronger.

Currently providers are not required to disclose this information above.

KiwiSaver providers must send out an annual statement to all their members in the three months following the end of the financial tax year. The statement is a mandatory disclosure document, along with the product disclosure statement and the fund fact sheet.

The Ministry of Business Innovation and Employment is currently working with the FMA and the CFFC to review the format and content of the KiwiSaver annual statement to consider ways to improve the information provided. The results of the survey will be taken into account.

For more information about how to make better decisions about your investments: www.fma.govt.nz/consumers

Full survey here

TABLE - Summary of survey results:

Have you read your statement?

  • 21% - have read it thoroughly.
  • 58% - have briefly looked at it
  • 8% - have not received it
  • 4% - intend to read it
  • 9% - hadn’t read it

Have you checked if your KiwiSaver is on track to produce the income they are planning for in retirement?

  • 23% - Yes
  • 73% - No
  • What information was most useful?
  • 93% - the current balance
  • 89% - contributions
  • 81% - investment gains or losses
  • 81% - tax paid
  • 78% - fees

What additional information would you like to see?

  • 72% - retirement lump sum
  • 62% - weekly income from the lump sum
  • 37% - fees shown in a dollar amount

What is most likely to prompt you to make changes to your KiwiSaver?

  • 46% - fees seem high
  • 36% - my fund lost money
  • 36% - another provider achieved better returns

Andrew Park
09 967 1215
021 220 6770