KiwiSaver sign-ups slump
The real damage here is to the savings culture of New Zealand.
New Zealand’s largest bank says confidence in KiwiSaver has been dented by sudden changes introduced in the Budget, with a plunge in the number of enrolments.
On May 21 Finance Minister Bill English announced an immediate end to the $1000 kickstart payment available to anyone who joined the statesubsidised savings scheme.
English dismissed the impact the change would have during a breakfast speech the following day. ‘‘Frankly, if people haven’t responded to the $1000 kickstart now, were they ever going to?’’
But ANZ, which has a 26 per cent share of the KiwiSaver market, said that in the month since the measure had been announced, enrolments had dropped by ‘‘more than 50 per cent’’.
The bank declined to give further details. However, IRD figures have showed that the net increase in people in the KiwiSaver scheme nationwide was running at about 15,000 a month, meaning the change could have put off thousands of people.
ANZ Wealth managing director John Body said the removal of kickstart had hit confidence in the retirement savings scheme.
An ANZ survey found that 62 per cent of those who had not joined the scheme were now less likely to, while 52 per cent were concerned the Government would make further changes.
It was ‘‘vital’’ that future changes were ‘‘well-telegraphed’’, Body said.
‘‘More than 2.5 million New Zealanders have invested in KiwiSaver. It’s clear that any changes to the scheme are likely to make people uneasy,’’ he said, adding that Kiwisaver remained an excellent savings vehicle.
‘‘Normally we’d be surprised if our numbers changed by 5 per cent, month by month,’’ Body said. ‘‘Our investors consistently tell us the one thing that removes their faith in KiwiSaver as a retirement solution is the continued changes to it.’’
The day after the Budget, ANZ chief economist Cameron Bagrie said that without the kickstart payment he would not have bothered to sign his own children up to the scheme.
Yesterday English said he was not surprised that there had been a reaction to the Government’s announcement, but he expected it would be short-lived. ‘‘If there’s some uncertainty at the moment just after we’ve announced the policy, I suppose that’s not a surprise, but in the long run it’s a sound and attractive scheme.’’
The removal of the kickstart payments is expected to save the Treasury around $125 million a year.
Labour finance spokesman Grant Robertson has said the party would reinstate the kickstart payments in government.
‘‘This is the sad inevitability of the change and maybe at a slightly higher rate that would have been expected,’’ Robertson said. ‘‘The real damage here is to the savings culture of New Zealand. We have traditionally been very poor savers as a country. KiwiSaver was making a big difference to that.’’