Over 5 per cent of KiwiSaver members are remaining in-scheme post the official retirement age, according to a new analysis by consultancy firm Melville Jessup Weaver (MJW).
The MJW study prepared for the Retirement Commission found about “153,000 members (5.2%) are aged over 65, and appear to be using KiwiSaver as an investment vehicle in their retirement”.
“The proportion of females over the age of 65 which have KiwiSaver balances is slightly higher than the proportion of males (5.5% versus 5.1%),” the report says.
Following recent legislation changes, over-65s are now allowed to join KiwiSaver – albeit without the benefits of compulsory employer contributions and annual government top-up via the member tax credit (MTC) system.
Whether the increase in the legal joining age has had much impact remains unclear, however, the 65-and-over cohort has grown steadily since 2016, according to Inland Revenue Department (IRD) figures.
The IRD statistics show the number of KiwiSaver members aged 65 or more rose from almost 109,000 in June 2016 to well over 186,000 five years later.
All other age cohorts have increased during the same period except the under-18 group, which has rapidly gone backwards since the-then National government removed the $1,000 kickstart payment in May 2015: under-18s are not able to access the MTC.
As at mid-2021 the number of KiwiSaver members aged under 18 totaled 255,528 compared to the June 2015 peak of just over 368,000.
Most of the under-age member balances are low, of course, but 67 kids had accumulated KiwiSaver accounts of $80,000 or more, according to the MJW analysis.
“The age bracket with the most members is 18-25 years, after which there is a fairly uniform distribution of members,” the MJW report says. “Unsurprisingly, the number of members falls away above age 65 as this is typically when members can access their savings.”
About 280,000 – or 70 per cent – of members in the 18-25 age bracket report KiwiSaver assets of between $0 to $10,000, the analysis shows.
“As we move into the older age groups, the spread of balances becomes wider, although there are members with less than $10,000 in each cohort,” the study says. “Of those aged 61 to 65, 20% have less than $10,000 saved, and a further 13% have between $10,000 and $20,000 saved.”
Given the age-weighting to younger members and the only 14-year accumulation history the average KiwiSaver account balance of $29,022 is low – with a marked male-female imbalance across all age cohorts.
“There is a notable gap between males ($32,553) and females ($27,061). The average balance for a male is 20% higher than the average balance for a female,” the report says.
“For those in the 61-65 year age group, the average savings balance of males is $13,149 higher than females. Males in this cohort have an average savings balance of $61,606, compared to females which have an average balance of $48,457.”
Retirement Commission policy director, Suzy Morrissey, said a hypothetical investigation of the MJW data – which captured over 90 per cent of the KiwiSaver universe – shows members have not taken full advantage of the savings potential on offer during the scheme’s 14 (going on 15) years in operation.
“What this has revealed is when comparing current balances to what would have been possible for a median wage earner to have accrued over the 14 years of KiwiSaver, we see that they are lower, on average, across all age groups,” Morrissey said in a release.
“Part of this can likely be linked to first home deposit withdrawals and saving suspensions, and people not participating in the scheme for the full 14 years that it has been available.”
The Retirement Commissioner will table its triennial review of retirement income policies in December this year.