KiwiSaver scheme transfer numbers spiked up sharply during February and March suggesting competitive pressures are building in the sector.
The latest Inland Revenue Department (IRD) figures show the number of KiwiSaver members seeking new pastures jumped above 13,000 in February – the highest monthly activity for at least a year – rising to 13,244 in March.
Scheme transfers have trended down significantly since the 2018 financial year peak when almost 163,000 members moved provider during the period. Over the 2020 IRD reporting period transfer numbers fell to just under 127,000.
KiwiSaver transfer figures fell to a low of 5,208 in April last year (as COVID-19 concerns peaked) from almost 11,800 in the previous month. Post the April nadir, monthly scheme transfer statistics ranged between 6,312 in May 2020 to 11,362 last November, according to the IRD report, before the recent burst higher.
As well as ubiquitous online marketing efforts featuring a wide range of providers, at least two firms – Milford and Generate – have stepped up TV campaigns of late.
But the recent uptick in transfers also coincides with the arrival of two new multi-choice KiwiSaver schemes since late last year.
Both InvestNow and the adviser-focused Consilium have seen healthy interest since their respective launches.
Mike Heath, InvestNow general manager, said the scheme had attracted over 700 members as at the end of March.
“We’re seeing a strong appetite for switching among KiwiSaver members, with diversified growth funds proving to be very popular. We have added Pathfinder and Harbour diversified growth funds to our scheme to specifically meet that demand,” Heath said. “As well, we can see some investors are likely chasing high returns but brand remains important while advertising is also having an impact.”
Behind the scenes, too, the IRD has been speeding up the scheme transfer process, he said, while the imminent arrival of annual member statements could spark further switching activity.
“So all the elements are there for an increase in KiwiSaver transfers,” Heath said. “We expect that to continue for a while, especially with the looming default scheme changes set to wake up many dormant members.”
The recent IRD statistics also point to diverging trends in the KiwiSaver market: financial hardship withdrawals climbed ever-higher in the first three months of 2021 as contribution holidays continued the steady decline dating back to the April 2020 peak.
About 2,000 members withdrew KiwiSaver funds on hardship grounds in March this year – up about 600 on January – although the figure remains below the December 2020 high of 2,526.
At the same time, first-home withdrawals set a new record this March as some 5,300 members collectively cashed in about $160 million to shop for real estate.
Total KiwiSaver membership cracked through 3.1 million in March as funds under management hovered around the $80 billion mark.