Stats show Kiwis keen to save more
Friday 2 September, 2005
Stats show Kiwis keen to save more – AMP SuperWatch
Only 2% of New Zealand households with a household income under $30,000 per annum have a workplace savings scheme available to them, compared with 35% of those with an income in excess of $70,000 – meaning the higher your income, the more likely it is you will have a workplace savings scheme as part of your employment package.
That means that lower income earners, who need the most help to get ahead, aren’t currently receiving that help from their employers, according to the latest AMP SuperWatch survey results released today.
“It has been identified that most Kiwis need to save more for their retirement and that workplace savings schemes are key to helping New Zealanders do that,” says Roger Perry, General Manager Savings & Investment for AMP Financial Services. “Plus with a tight labour market, today’s employers need to offer a scheme to make their job offering more compelling.”
When asked about the Government’s Budget announcement that it intended to launch the KiwiSaver initiative, figures from the latest AMP SuperWatch survey showed that 38% of those respondents not already retired planned to join the scheme. And that group tended to be those with a household income under $30,000 with pre-school children, or younger people or couples under 30 years of age with no children.
“This essentially tells us that the KiwiSaver initiative or a similar workplace savings scheme would have some appeal to this particular group,” says Roger Perry, General Manager Savings & Investment for AMP Financial Services. “We would hope that this group is being attracted by the savings concept rather than purely the $1000 incentive.
“The next challenge a Government would face with a concept like KiwiSaver would be how to get the higher income bracket to start saving more for their retirement. Our figures suggest that perhaps the $1000 incentive outlined in the KiwiSaver concept isn’t enough to entice these higher income earners. So the KiwiSaver concept is a good start but to really be successful in encouraging all income and age brackets to save, there need to be other elements in the scheme, particularly promotion of workplace superannuation, which will also appeal to other Kiwis.”
The AMP SuperWatch survey also showed that of those New Zealanders not currently retired, 37% are saving for their retirement. Importantly, this figure rises to 63% of those in the pre-retirement age bracket of 50-59 who are putting something away for their retirement. Those who live outside Auckland are the most likely to be planning for their retirement through some form of savings – 39% of those not retired compared to 29% of Aucklanders not retired.
But even though some Kiwis say they are not saving for their retirement yet, they do have very clear ideas of what they want to do when they retire. Of those surveyed, 90% said they want to have a debt-free home, 81% want to be able to take holidays or travel, while 72% see themselves financially assisting their family.
The AMP SuperWatch figures also showed that when it came to the question of what the main barriers were for respondents to be able to save for retirement, general earning power was highlighted as a huge barrier, especially for those households earning under $30,000 per annum. However, for those households with an income in excess of $70,000, the most common reason they also gave as being the largest barrier to saving was not earning enough.
Of those Kiwis who say they are saving for their retirement, 45% said they were doing this by paying off their mortgage. And of those now nearing retirement age – in the 50-59 age group – 36% indicated they are more likely to be seriously considering downsizing their home to free up equity to fund their retirement years.
“So what we are seeing is an indication of reality kicking in for this age group that is nearing retirement,” says Mr Perry. “Earlier on, it’s easy to say that we plan to travel and have a debt-free home and help the family with their financial affairs, but if there hasn’t been a concerted focus on saving for this ‘perfect retirement’, then this can all go out the window. More Kiwis need to understand this earlier on, not when retirement is literally just around the corner – and have less of a focus on instant gratification now and more on looking to future gratification.”
Those respondents overall aged 30-39 years are more likely to be saving for retirement by paying the mortgage whereas those aged 50-59 years are more likely to be investing directly in shares or a managed fund and those aged 60-69 are more likely to hold their retirement savings in a bank or term deposit.
Suzanne De Spong
Phone: 09 523 7723
0274 960 864
(Note for editors: The AMP SuperWatch survey was conducted by Colmar Brunton in July 2005 and has a sample size of 500. The margin of error is a maximum of plus or minus 4.5%. All respondents were aged 18 or over.)
AMP SuperWatch, July 2005
Q2. Can you please tell me whether or not you are saving for anything at the moment. Please include any savings you do on your own or jointly with your partner.
Don’t know -
All respondents (500)
Q3. Which of the following items or events are you personally, or you and your partner, currently saving for?
Retirement or Superannuation 52
Travel or holidays 40
A rainy day or emergency fund 37
Education - Your own or your children’s or grandchildren’s 18
Home improvements 17
A deposit for a home purchase 16
A new car 10
Don't know/no answer 2
Currently saving (314)
Q4a Which of these are you currently doing that you view as part of your saving for your retirement?
Paying off the mortgage on your home 45
Contributing to a private superannuation savings plan 45
Contributing to a workplace superannuation scheme 34
Investing in bank or term deposit investments 40
Investing directly in shares 23
Investing in a Managed Fund or Unit trust investments 30
Investing in your own business 14
Investing in Residential property other than your own home 31
Investing directly in commercial property 4
Something else not mentioned 5
Don’t know 1
Saving for Retirement (163)
Q4b What are the main barriers at the moment for you to be able to save for your retirement?
Don’t earn enough 34
Too many other financial commitments 17
Haven’t got around to it 11
No barriers 10
I am concentrating on my mortgage 7
Not a priority at this time 7
Student loan 6
Don’t know where to start 4
Savings gets taxed 4
Still young 4
High cost of living/ inflation 3
Don’t trust advisers/financial institutions 2
Investing in property 2
Government will provide for me 1
Expect to get inheritance 1
Currently saving but not saving for retirement (111)
Q5 Does your current employer provide a work place superannuation scheme that you are eligible to join?
Don’t know 3
Currently employed or self employed (348)
Q6 Why don’t you participate in your workplace scheme?
May 2004 (%) Dec
2004 (%) Jul 2005
Already a part of another scheme - - 55
Haven't got around to it 15 16 9
I have a private scheme 26 13 6
Am saving through other means 7 2 4
Family issues, cant afford it 3 0 4
I am concentrating on my mortgage 1 5 3
Haven't been there long enough 11 13 2
Too late to join now 4 3 2
Can't afford it 9 12 1
I only work part-time 7 1 -
Other 22 32 -
Have workplace scheme but don’t use it (57) (77) (69)
Q7 Does your employer contribute to the scheme, either through covering the administration costs or by matching all or some of the money employees contribute?
(%) Dec 2004
(%) Jul 2005
Contributes admin costs 24 36 24
Contributes/matches employee funds 68 55 60
Does not contribute 5 11 6
Don’t know 16 14 10
Employer provides workplace scheme
(MULTI RESPONSE) (124) (165) (79)
Q8 If an employer provided a superannuation scheme for employees, how important would that be in your decision to take a job with that employer or choose to stay. Please rate using a scale from 1 to 5 where 1 means not at all important and 5 means extremely important?
(%) Jul 2005
1 – Not at all important 22 17 22
2 9 13 13
3 26 28 24
4 23 20 22
5 – Extremely important 17 18 15
Don’t know 2 3 4
Mean 3.1 3.1 3.0
All not retired already (465) (586) (397)
Q9 Which of the following do you expect to be able to do when you retire?
(%) May 2004
(%) Jul 2005
Have a debt free home 88 89 92 85 90
Financially assist family 63 70 65 62 72
Buy a late model car 50 50 50 46 44
Holidays or travel 80 82 83 80 81
Recreation eg. golf, bowls, fishing, arts, fitness 82 85 86 76 80
Covering day to day basic living costs 92 95 96 90 92
Replace household appliances Not asked Not asked Not asked Not asked 79
None/Don’t know 1 - - 1 1
All not retired already (579) (585) (465) (586) (397)
Q10. Are you aware that in the budget the Government announced a new savings scheme called KiwiSaver?
Don’t know 1
All not retired already (397)
Q11. How likely do you think you would be to join the KiwiSaver plan?
Very likely 18
Somewhat likely 20
Very unlikely 29
It would depend on my situation at the time 2
I would need more information 6
I will decide nearer the time 2
Too old/already retired 1
Other (specify) 1
Don’t know 4
All not retired already (397)
12a. Do you own your own home in part or in full?
All Respondents (500)
Q12b. Are you planning on selling your home and moving into a smaller or cheaper property to use some of the equity in your home to help fund your retirement?
Don’t know 5
Own their own home (395)
Q12c. In the event that you faced unexpected expenses or found you didn’t have enough to fund your retirement would you consider selling your home and moving into a smaller or cheaper property to use some of the equity in your home to help fund your retirement?
Don’t know 7
Own a home, not planning on downsizing (293)
Q13. If you could choose today, which would be your preferred form of saving for your retirement?
Paying off the mortgage on your home 21
Contributing to a workplace superannuation scheme 14
Investing Residential property other than your own home 14
Contributing to a private superannuation savings plan 10
Investing in bank or term deposit investments 10
Investing in your own business 9
Investing in a Managed Fund or Unit trust investments 5
Investing directly in shares 4
Investing directly in commercial property 3
Something else not mentioned 2
Already retired 1
Don't know/no answer 7
All Respondents (500)