KiwiSaver has been around for quite some time now – since 1 July 2007 in fact. And before it was officially launched, there was plenty to be said about it in the media. Yet despite the passage of time, and the many articles to be read about it, confusion about KiwiSaver continues unabated. Research conducted for Kiwi Wealth, the KiwiSaver scheme of KiwiBank found:
- Just over 80% of KiwiSaver investors did not know who was managing their KiwiSaver scheme. That’s a bit like mad Uncle Arthur hiding his money in the back of an old book and forgetting which book he put it in.
- 77% have no idea what their KiwiSaver account will be worth on retirement. So will they have saved enough? Who knows?!
- 31% have never reviewed the type of fund their savings are invested in to know if they are appropriate, while 27% have no idea what type of fund their money is invested in in the first place (cash, conservative, balanced, high growth etc).
- 14% of KiwiSavers don’t even know who their KiwiSaver provider is!
A quick look at the types of complaints being laid before the Banking Ombudsman reveals even more confusion about KiwiSaver – the majority of complaints are about people’s inability to take their money out, especially on hardship grounds. One thing to get clear – KiwiSaver is NOT a general savings account.
So why all the confusion?
There is plenty of information about how to sign up to KiwiSaver. In fact, many people have found themselves signed up and are a bit bemused as to how that happened. They got a new job and BAM – they are in KiwiSaver! Their money has been automatically invested in a default scheme and their employer takes care of their ongoing contributions. Being “involved” in KiwiSaver is easy.
What is disturbing is that 75% of those surveyed for the Kiwi Wealth research said they had not or did not recall receiving information on how to use KiwiSaver to reach their retirement goals when they signed up. Now imagine if your travel agent told you “you are booked into Belmond Palacio Nazarenas for two weeks next month”. Ummm, where exactly IS Belmond… whatever? You wouldn’t be happy with a travel agent who didn’t help you reach your destination goals. The same should apply to your retirement goals.
What can you do about it?
If you are feeling overwhelmed and confused about KiwiSaver, don’t feel bad or embarrassed about it – you are truly not alone. Seek advice from an authorised financial advisor, who can explain how it all works and help you plan to get to get the most out of KiwiSaver in words that make sense to you. Free help is literally a phone call away.