KiwiSaver continues to grow steadily according to the FMA’s 2018 KiwiSaver report.
The FMA publishes a report every year based on all providers’ statutory data for the year to the end of March. Total funds in KiwiSaver for the 2018 period were just under $50 billion dollars and the number of people in KiwiSaver has risen to more than 2.8 million.
Total assets in KiwiSaver rose by $7.8 billion to $48.6 billion during the period. Investment returns rose from $2.7 billion a year earlier to $3.2 billion.
KiwiSaver has now delivered positive returns to its members for a number of years, reflecting the growth in asset prices around the world.
$731 million was withdrawn by members who are 65 or older to help fund their retirement. 32,088 withdrew $723 million to help them buy their first home.
Liam Mason, Director of Regulation at the FMA said, “KiwiSaver is becoming a major part of individuals’ and the country’s wealth. Our focus is on helping KiwiSaver members make informed choices. We want providers to make their reporting of fees transparent and easy to read. To help with this fees in dollars now have to be shown in members’ individual statements.
We also created the FMA KiwiSaver Tracker tool based on disclosures in providers’ quarterly fund updates to help members compare and contrast fees and returns more easily.”
Fees and default providers
The FMA’s regulatory focus for the reporting period has been on fees, disclosure and the efforts of default providers to support their members to make active decisions.
The average investment management fee paid by members over the 2018 reporting year was $117, almost 20% more than a year ago. During this reporting period, all schemes were charging fees based on a percentage of a members assets, so that rising balances result in increased fees in dollar terms. In the coming year, we will be carrying out further work on fees.
The number of members in default funds fell by 3% to 431,779. While people are still joining through the default mechanism, (64,220 this year), total default membership has declined and is at its lowest level since 2011.
28,603 default members made an active decision about the type of fund they wished to be in after being contacted by their provider, up from 16,902 a year ago.
“Overall default providers have improved their efforts to help their members make active decisions about their investment fund type. We still think some providers could do more and we’ve engaged with firms where we considered they needed to improve,” Mr Mason said.
A government review of the settings for default providers is due to begin next year and the FMA expects the performance of default providers in their engagement with members will be considered as part of this review.
You can view an interactive version of the report including the data sets over time here.