Oblivious to KiwiSaver changes

Many New Zealanders fail to spot fees now shown in dollars

Less than third of the people who read their annual KiwiSaver statement this year noticed the fees were in dollars, research has revealed.

This year was the first time providers had to include the fees, that a person paid, in dollars in their annual statement.

Previously it was a mixture of percentages and dollar amounts which had led to criticism that investors didn’t really know how much they were paying for having their money managed.

Annual statements come out once a year around May and June and include information on how much people have contributed to their KiwiSaver account, what the performance of their fund has been and the current balance.

But a survey by the Financial Markets Authority shows the change went unnoticed by 50 per cent of those it questioned and a further 18 per cent were not sure if they had seen the new information or not.

Of those who saw the dollar fee figures, around half (53 per cent), thought they were about right, 30 per cent thought they were too high, and 4 per cent too low.

But even people who thought the fees were high were not prompted to do anything about it with just 27 per cent saying they were considering changing their scheme or provider as a result.

Liam Mason, FMA director of regulation, said he would have liked to see more people notice the change but it was still early days.

“It tells us we are on the right track . . . but we have got to keep working at that engagement.”

He said it was good to see that when the fee data was noticed that it was useful to people and, for many, there was real value in understanding how much they were paying in fees.

The survey found 72 per cent rated their scheme as either good, very good or excellent value for money.

Mason said it was never too late for people to assess how much they were paying in fees.

“If you are paying too much for KiwiSaver the earlier you look at that and make a change the more difference it is going to make in the long run.”

He said it could make thousands of dollars of difference to a person’s retirement savings.

The research also found it was concerning that two thirds of KiwiSaver members had never checked that their KiwiSaver was on track to produce the income they were planning for in retirement.

Although that had improved from the 73 per cent which had never checked in the 2016 research.

The Government is in the process of consulting providers about how projections of total savings at retirement and the income that it could produce could also be included in annual statements.

The survey found readership of KiwiSaver statements remained high with 78 per cent saying they had seen it but was slightly down on the 79 per cent who had in a 2016 survey.

Of those who had seen it, 20 per cent read it thoroughly. Those most likely to read it thoroughly were male, married or living with a partner and aged 60 to 69.

People who didn’t read it said the biggest barriers were lack of interest, too much information or it was too complicated.