KiwiSaver sign-ups have dipped again over September to an all-time low, falling to less than half the rate recorded in the month prior to the removal of the $1,000 ‘kickstart’ incentive.
According to the latest Inland Revenue Department (IRD) statistics, total KiwiSaver membership grew by 8,087 during September compared to over 17,000 in May. The government cancelled the $1,000 upfront KiwiSaver sign-on incentive in its May 21 budget.
In the seven months to the end of May this year the average monthly net growth in KiwiSaver members stood at about 15,000 compared to an average growth rate of just 8,500 over the three months to the end of September, the IRD figures show.
As per the post-budget trends, the KiwiSaver membership growth crunch has primarily hit the younger age brackets with both the 0-17 and 18-24 cohorts seeing absolute member numbers drop by 1,495 and 715 respectively over September. Since the May 2015 peak of 368,630 KiwiSaver members, the under-18 age bracket has declined by over 4,500 while the 18-24 cohort has shed more than 1,000 members since its June high point.
David Boyle, Commission for Financial Capability (CFFC) head of investor education, said while the fall-off in under-18 KiwiSaver members was not surprising it was “more of a concern” if 18 to 24-year olds were opting out of the savings regime due to the kickstart cancellation.
“It’s possible they’re not aware they will be missing out on the [annual $521] member tax credit,” Boyle said. “There could be other factors at play too such as fewer people getting jobs for the first time in the September quarter [which would spark KiwiSaver auto-enrolments].”
The number of people who have opted out of KiwiSaver after auto-enrolment also climbed slightly after experiencing a falling trend since last October. According to the IRD figures, as at September 30, 234,383 individuals had opted out of KiwiSaver after being auto-enrolled compared to 233,835 the previous month and almost 239,000 at the end of October 2014.
Despite regulatory concerns about member-poaching behaviour by KiwiSaver providers, transfers remained on-trend in September with almost 11,900 members swapping schemes during the month – down from 12,316 in August but well within the range of monthly transfers over the previous 12 months.
It is understood the Financial Markets Authority (FMA) report on bank KiwiSaver selling practices will be published later this month.