Both KiwiSaver financial hardship claims and contribution holiday-maker numbers crept up in the back-end of last year amid market volatility and rising inflation.
According to the latest Inland Revenue Department (IRD) KiwiSaver statistics, monthly financial hardship payouts rose from an annual low of about $7.9 million in June 2022 to almost $14.5 million in December: close to 2,100 members made a hardship claim in the final month of the year compared to 1,200 or so six months prior.
At the same time, the number of KiwiSaver members on contribution holidays (now known as ‘savings suspensions’) jumped from just 98,000 in July to more than 103,300 by December.
Despite the relatively small absolute increases in financial hardship and savings suspension figures, the upward trend in both statistics serves as something of a bellwether for background economic conditions in NZ.
KiwiSaver has historically been an early casualty in tough times given the ease of halting contributions to help pad out household budgets. Financial hardship claims, too, naturally rise and ebb in line with the general economic vibe.
In dollar terms, hardship payments have increased almost every financial year (12 months to June 30) since 2012, rising from close to $23 million then to $145 million over the 2021 period: against trend, the annual statistic fell to just more than $100 million the following year.
Meanwhile, KiwiSaver first-home monthly withdrawals fluctuated between about $70 million to $90 million last calendar year – aside from the standout $102 million March 2022 figure.
Again, first-home withdrawal numbers stalled slightly for the 12 months to the end of June last year, edging down to $1.2 billion compared to the all-time high of almost $1.6 billion during the previous 12-month period.
Following the default regime change distortion of late 2021 and early 2022, KiwiSaver transfer activity also settled down in the latter half of last year with the December scheme-swapper number of 7,183 representing the low-point for the annual period: the transition of the Aon scheme to Fisher Funds control saw transfer figures spike higher over July and August as 18,481 and 17,584 members moved compared to the 2022 month average of about 9,000.
If the member statistics flash a faint early-warning signal of economic distress, the just-released Reserve Bank of NZ (RBNZ) official quarterly KiwiSaver numbers confirm a rare down year for the sector.
Total KiwiSaver funds under management (FUM) fell 3.2 per cent during 2022, equating to a year-on-year decline of about $3 billion, according to the RBNZ survey, despite a 2.2 per cent bump up in the December quarter.
Overall FUM across the entire NZ managed funds market covered in the RBNZ data dropped almost 5 per cent for the calendar year to just over $251 billion (compared to $264.3 billion as at December 31, 2021).
While risk assets recovered somewhat in final quarter of last year, the RBNZ survey suggests investors also turned defensive.
“Short term debt securities recorded a quarterly increase of 32.1% to $19.6b this quarter and recorded an annual increase of 14.5%,” the December fund report says. “Cash increased 5.3% from $35.0b to $36.9b this quarter.”