KiwiSaver has seen an uptick in pension-age members holding on to their accounts suggesting the regime is increasingly perceived as a post-employment investment option, according to a new Melville Jessup Weaver (MJW) report.
The MJW study, the fourth in an annual series commissioned by Te Ara Ahunga Ora Retirement Commission, shows a “gradual increase” of those aged 65 or more as KiwiSaver members from just over 5 per cent in 2021 to the latest reading of almost 6 per cent.
“Approximately 190,000 members (5.8%) are aged over 65, and appear to be using KiwiSaver as an investment vehicle in their retirement,” the report says. “This is an increase on last year (180,000 and 5.5%).”
A change to the KiwiSaver legislation in 2018 abolished the upper age joining limit of 64 but the system always allowed members to remain past the official retirement age. However, KiwiSaver members aged over 65 are not automatically entitled to receive employer contributions or the government annual top-up of a maximum $521 (and a few cents).
While the number of 65-plus KiwiSaver investors roughly halves over each five-year cohort up to age 80 before falling away more sharply, the MJW data shows, as expected, older members have higher average account balances.
The average KiwiSaver balance rises from about $65,000 for those in the 56-60 age bracket to almost $175,000 for the – admittedly much-reduced -membership base of about 350 aged 86 or more.
Furthermore, the savings scales only tip in favour of women in the late-life stages where the average female KiwiSaver balance is almost $90,000 in the 81-85 cohort compared to $82,451 for men in the same age-range: women KiwiSaver members aged 86 or more have an average balance of $206,152 – or more than $50,000 above their male counterparts.
But the octogenarian advantage for female members hardly makes up for the sex-dollar-imbalance through all other KiwiSaver age brackets.
“There continues to be a notable gap between males (average balance $42,664) and females ($34,185). The average balance for a male is 25% higher than the average balance for a female, a gap of $8,479,” the MJW report says. “While expanding in monetary terms, the ratio of the average male balance to the average female balance has remained around 25% for the last two years.”
In a statement, Retirement Commission policy lead, Michelle Reyers, said the gender-gap in KiwiSaver balances is also particularly wider during the peak earning years from 40 through to those in their 60s.
“This pivotal information shows the combined long-term effect of factors such as the gender pay gap, time out of paid work, and the higher percentage of women than men who work part-time,” Reyers said.
“It tells us that at an age when many women may be returning to the full-time paid workforce after years of unpaid caregiving and necessary part-time work, the effect comes more starkly into focus.”
The previous Labour-led government introduced a measure to ensure those on paid parental leave continue to receiving matching employer and government payments if they keep up their employee contributions.
However, the Retirement Commission is pushing for the relief to be extended to all those on parental leave even if they can’t make employee contributions.
The Commission is also lobbying to increase the minimum default KiwiSaver contribution to at least 8 per cent (split 50/50 between employer and employee).
MJW surveyed schemes representing almost 3.29 million members and close to $122 billion, representing about 97 per cent of the total KiwiSaver market as at the end of last year: three providers that previously supplied data declined to participate in the study this time (with a collective membership of 36,000 or so) while a 11,000-member scheme joined the statistical effort for the first time.