Supplied Content
Wellington, May 26, 2021
The Financial Markets Authority (FMA) has urged young New Zealanders to check if they are in the right KiwiSaver fund.
The call followed release of data indicating that more than 12,000 KiwiSaver members aged between 26 and 35 years are sitting in lower risk or conservative funds after switching from higher growth funds during Covid-19 market volatility last year.
Subscribing to Conservative Funds
Data supplied to the FMA by 11 KiwiSaver providers showed that about 12,700 younger KiwiSaver members switched from growth to conservative funds between February and April 2020 and that most of them are still sitting in conservative funds, which may not be aligned with their long-term savings goals.
https://youtu.be/3l6wT4RX9u8
FMA Manager (Investor Capability) Gillian Boyes, has called on young Kiwis to take notice of their annual KiwiSaver statement and check if they are in the fund that suits their needs.
“Generally speaking, you should be in a high growth fund the younger you are and the further you are from retirement. Growth funds provide the greatest opportunity to maximise returns and although the balance might jump around, young people have plenty of time until retirement age to recover any losses,” she said.
Ms Boyes aid that the exception is that if a person is planning to make a first-home withdrawal within the next one to three years and may want to choose a conservative fund so you have more certainty around your balance.
Large switches
Ms Boyes said that the number of young people who switched last year and are still in conservative funds is likely larger than 12,000 because the FMA data represents around three-quarters of the KiwiSaver market.
The FMA will soon release the full dataset in a report focused on KiwiSaver fund switching during the pandemic.
What investors can do
Each year, the FMA runs a campaign encouraging KiwiSaver members to take a looksee at their annual statement, which arrives between April and June via post or email. The document contains important information about a person’s KiwiSaver account, including the type of fund they’re in, how much they’re projected to have by age 65, and what that lump sum means as a weekly payment spread out over 25 years.
This year the FMA is providing members with information and resources on why fund choice is so important, what fund might be right for someone, how to change funds, and getting financial advice.
Some important questions
Members should ask themselves these questions: 1. Am I in the right KiwiSaver fund? 2. Can I afford to contribute more? 3. Am I getting good value from my KiwiSaver provider – do their fees seem reasonable? 4. Am I happy with the amount of money that I will have in my KiwiSaver at 65?
The FMA campaign includes (1) A social media campaign, including short case study videos featuring 24-year-old Shannon and 33-year-old Lucas, reminding people to check if they are in the right fund (2) An Instagram Live Q&A session hosted by ZM presenter and social media influencer Cam Mansel to answer young people’s questions about KiwiSaver, featuring FMA’s Gillian Boyes, on Wednesday, May 26, 2021 at 6 pm (FMA Instagram) (3) Bus shelter advertisements around University of Auckland and AUT featuring a QR code to the Looksee campaign page.
The above story has been sponsored by
