It’s official: KiwiSaver is getting older.
New data from the Financial Markets Authority (FMA) shows the KiwiSaver membership age skewed upwards over the 12 months ending March 31.
According to the FMA figures, the proportion of KiwiSaver members aged 66 and above jumped by 12 per cent in the latest annual period to almost 130,000 as at the end of March.
Liam Mason, FMA director regulation, said the rise in the post 65 bracket could suggest new rules allowing older New Zealanders to join KiwiSaver were having an effect.
Until last year, those aged over 65 were prohibited from joining KiwiSaver but existing members could remain in the scheme after reaching the retirement age.
KiwiSaver members are also able to withdraw their savings once they turn 65 and about 20,000 chose to during the 12 months ending March 31.
However, with term deposit rates sinking below 2 per cent, members past retirement age might also be encouraged to keep their funds working harder in KiwiSaver.
Whatever the reason for the spike in retiree members – Mason said the FMA had no data yet on those aged over 65 joining KiwiSaver – the average member age has also increased along with the shrinking under-18 cohort.
Just-released Inland Revenue Department (IRD) statistics, show the under-18 KiwiSaver population fell more than 20,000 in the 12 months to June to reach 281,000: at its peak five years previously the same figure stood at almost 370,000. The-then National-led government removed the $1,000 kick-start payment for all new members in 2015 while simultaneously cutting the annual state KiwiSaver top-up (of a maximum $521) for those aged under-18.
Aside from the age-related trends, the FMA 2020 annual KiwiSaver report released last week also highlighted a 54 per cent spike in intra-fund switching behaviour – sparked by COVID-19 market panic in March – and a slight decrease in transfers between schemes.
During the 12-month period over 250,000 members switched investment funds within their scheme, the FMA report shows, while about 2,100 members made five or more fund changes over the year.
Mason said in a release: “We have acknowledged the efforts providers made to support their customers through the heightened period of volatility. We’re keen to see providers continue this level of engagement and encourage more informed decisions about switching funds and understanding market volatility.”
Over the latest financial year, the number of members transferring between rival KiwiSaver schemes fell to about 127,000, down from close to 145,000 in the previous reporting period, according to the IRD statistics.
Mason said the FMA report also picked up a slight decline in fees – as noted in the recent Investment News NZ ‘KiwiSaver the 13th’ study – but the regulator was pushing for further reductions as scale built in the system.
“Some administration fees came down over the year but there wasn’t much reduction in management fees,” he said.
The FMA published a ‘value for money’ analysis earlier this year that found no relation between fees and active and passive investment styles in KiwiSaver.
“We were told to expect that active managers would charge more than passive – but we didn’t see that,” Mason said.
He said the FMA would release guidance on passive and active management for KiwiSaver providers soon. The regulator was also working on a guide to lay down responsible investment (and related terms) disclosure standards in a bid to fight so-called ‘green-washing’.
“That’s very close to release,” Mason said.