KiwiSaver membership is on track to top the 3 million mark this month after falling just 1,500 shy of the watershed figure as at the end of October, according to the latest Inland Revenue Department (IRD) statistics.
Over the last year, KiwiSaver has been grinding out regular monthly net member gains of about 7,000 to 8,000, which, barring a shock slump in net sign-ups, will easily push the market beyond 3 million in November.
The year-on-year member growth rate of just 3.2 per cent is well below the heady early days of KiwiSaver when the average provider could count on an annual increase of 10 per cent or more.
KiwiSaver almost hit 1 million in members in just its second year of operation during 2009 and doubled the amount by 2012.
However, the nominal net membership growth of over 93,000 during the 12 months to the end of October, is providing steady – albeit unevenly-distributed – flows to the KiwiSaver market.
As per recent trends, though, the KiwiSaver member demographic edged up over the year; partly due to the aging population but also as the un-incentivised under-18 market slumped further. In 2015 the-then National government removed the $1,000 KiwiSaver ‘kickstart’ payment that hitherto was the only carrot open to under-18 members: the annual ‘member tax credit’ (MTC) top-up (of a maximum $521) is only available to those aged 18 or more.
The IRD statistics show KiwiSaver held a tad under 295,000 ‘children’ as members as at the end of October, down more than 2,000 over the month and almost 20,000 for the annual period.
At the other end, more than 2,000 members exited the savings regime in October – mostly on retirement grounds. Since inception in 2007, about 246,000 KiwiSaver accounts have been closed including close to 156,000 retirees. As of this April, people aged over 65 can join KiwiSaver (existing members were always free to stay) but all those in this cohort miss out on the MTC and mandatory employer contributions.
Elsewhere, the IRD figures reveal KiwiSaver first home withdrawals continued apace in October as 3,830 plus members cashed-out a collective $110 million, which was about the monthly average for the year. The IRD also records a sharp spike upwards in hardship withdrawals last month with 1,771 members clawing back over $9.7 million between them – the second-highest monthly drawdown of the previous 12 months.
Competition between providers remained at recent historical levels in October as 11,837 members swapped schemes, a figure about on par for the annual period that saw monthly variations between 7,677 and 14,793, according to the IRD.
The government statistics also suggest a growing proportion of KiwiSaver members are making active scheme choice even as the number defaulted-in climbs.
Auto-enrolment accounted for about two-thirds of the KiwiSaver member increase over the 12-month period while over 25,000 New Zealanders voluntarily joined a scheme.
Despite the high number of auto-enrolments (in total almost 1.3 million people have been ‘carouseled’ into KiwiSaver schemes), the number of members remaining in default funds fell during October, the IRD figures reveal.
Just under 586,000 members are still in default-allocated KiwiSaver funds, representing a drop of almost 400 compared to September.
During the 12 months to the end of October, the number of members who have made an active scheme choice rose by almost 80,000 (a total of 2.2 million now fall in this camp) compared to an increase of only 11,000 or so extra default-remainers year-on-year.
Proportionally, KiwiSaver members who have not made an active choice fell from about 19.8 per cent last October to 19.5 per cent at the same time this year, which should be some cause for optimism among regulators, government and providers who routinely fret about the ‘unengaged’.
As reported elsewhere this week, most default providers are backing a change to the investment settings mooted in a statutory government review that will push this apathetic member cohort up the risk scale.
While KiwiSaver reaching 3 million might be quietly celebrated across the industry, the dream of universal coverage remains out of reach with the NZ total population set to break through 5 million next year.