No, the Govt isn’t taking from your KiwiSaver

KiwiSaver members’ worries that the Government is ‘‘stealing’’ their money reflect a lack of understanding of how the scheme works, one fund manager says.

Markets around the world have dropped significantly since the impact of coronavirus began to be felt on global economies.

Growth funds have fallen about 13 per cent in the year so far, conservative 2 per cent and moderate 5 per cent, according to Morningstar data.

That has prompted some investors on social media to say the Government is ‘‘taking their money’’.

‘‘It’s dumb but the Government is entitled to it,’’ one wrote.

‘‘Everyone check your KiwiSaver, Government be out here pick-pocketing a lot of your guys’ money,’’ wrote another.

Frank Jasper, chief investment officer at Fisher Funds, said his firm was fielding calls along those lines too.

‘‘It’s a subset of the client base but it’s definitely one that’s been a little on the vocal side.’’

He said many people had not invested in the share markets before they opened a KiwiSaver account and thought of it as being like a bank account or a turbocharged term deposit. ‘‘We do get clients ringing up asking ‘what’s your rate on KiwiSaver? It does speak to a misunderstanding.’’

Markets had been strong for most of KiwiSaver’s existence, with only short, sharp sell-offs that some investors might not have noticed. ‘‘Up to this point those investors have experienced some the least variable share and fixed

income market conditions we have ever seen.

‘‘For them it’s quite a shock [to see markets fall] and when you get a shock you look to who to blame.’’

He said KiwiSaver managers had spent the past decade trying to get people to engage with the scheme to understand how it works. ‘‘Maybe this changes that.’’

He said people needed to keep in mind that variable share prices were the cost of investing in an asset that would generate better returns over time.

‘‘History shows that over time shares generate higher returns but those returns are variable and at times downright uncomfortable. This is one of those times. If you are saving for a long timeframe and you want those higher returns from shares, learning to accept the bad times as well as enjoy the good times is crucial. History tells us that is a winning strategy to building long term wealth. ’’