AXA: number of kiwis saving through work to double
Media Release – for immediate release
15 May 2005
AXA sees number of kiwis saving through work doubling
AXA New Zealand believes the anticipated Budget announcement of initiatives to encourage workplace-based retirement saving will have a major influence on the saving behaviour of New Zealanders.
AXA’s Gordon Noble-Campbell says the company believes there is the potential to double the number of New Zealanders currently saving for retirement at work.
Mr Noble-Campbell said there had been a long-term downward trend in work-place retirement saving, with the number of New Zealanders saving at work declining in the past 15 years from 22% in 1990 to 14% currently.
“In recent times, workplace retirement saving has been strongly out of fashion. We believe the expected announcement in the Budget, on top of the awareness raised by the introduction of the State Sector Retirement Savings Scheme, will be a catalyst for fundamentally changing this.”
He said survey after survey showed New Zealanders want to save for their futures, but that they needed additional motivation to make even a small regular contribution. Doing so at the point of earning was logical.
“People are often sufficiently frightened by the amount they are told they will need to save over their life-time that these figures can actually act as a disincentive to save. The difference between knowing that you need to save, say, $100 per week rather than a lump sum of hundreds of thousands of dollars is psychologically very significant. And every little bit helps. The workplace is an obvious place to make that contribution.”
While many employers currently see providing a retirement saving framework within their business as a potential issue, the tight labour market and the benefits of employee retention and satisfaction means many are likely to come to regard such an arrangement as beneficial to their enterprise – a responsible step in employee relationship management.
Mr Noble-Campbell said AXA was working with business owners and operators to help them consider options that will increase the future wellbeing of their staff. A key aspect of this was increasing “financial literacy”.
“The key thing is that the process is kept simple – the fewer decisions that staff need to make in terms of fund provider and the nature of the fund, the more likely they are to be involved.”
It was also important that the funds were invested specifically for retirement to prevent savings schemes becoming glorified bank accounts, which could undermine the effectiveness of the scheme and would also increase provision costs.