Kiwi investors urged to learn from Aus super exper
Kiwi investors urged to learn from Aus super experience
AUCKLAND, 28 OCTOBER 2005 –While welcoming the Reserve Bank's recent call for New Zealanders to save more, Russell Investment Group is also urging Kiwi investors to be smart and learn from the experience of Australian investors when our KiwiSaver scheme is implemented.
The KiwiSaver initiative was announced by the Government in the 2005 Budget and should commence in April 2007 after going through a legislative process. The Government will make an initial contribution of $1000 to each person’s scheme which would be “locked-in” until the recipient reaches the age of eligibility for NZ superannuation or for five years, whichever is the greater. Unlike the Australian superannuation scheme, the KiwiSaver saving scheme is voluntary, though like Australia it is work based and savers select their own fund and fund provider.
Russell's Australia-based superannuation specialist Heather Dawson, who was in New Zealand this week meeting clients, said she hoped the introduction of the KiwiSaver scheme would not result in dozens of new superannuation products flooding the market and confusing investors as had occurred in Australia with the launch of Choice of Fund on 1 July 2005.
Choice of Fund is an extension of Australia’s compulsory superannuation scheme that was introduced in 1992 and enables investors to choose where their superannuation savings are invested. Their options include property, Australian shares, overseas shares, fixed interest funds or a mixture of sectors.
“In the lead-up to 1 July there were new funds launched, do-it-yourself options, retail funds, workplace funds and brokerage accounts. Given most people have limited knowledge about how to invest or save for their retirement, it isn’t surprising that the majority have been overwhelmed by the decision they have to make with the choice of new products on the market,” said Dawson.
Dawson said as in Australia, the onus will be on New Zealand investors to consider all aspects of a potential superannuation fund, taking into consideration their personal circumstances and investment needs.
Dawson said she was concerned the array of products currently available in Australia and potentially in New Zealand when the KiwiSaver scheme is launched would result in investors attempting to manage their own superannuation planning without seeking advice from a financial advisor, when they don’t have the experience to do so.
“For informed and knowledgeable investors the Australian Choice of Fund is a good initiative, as it allows people to change their superannuation arrangements if and when change provides a real benefit. This will be the same for New Zealanders investing in the KiwiSaver scheme.
“Unfortunately for the uninformed or those susceptible to listening to their friends or big advertising campaigns, it can lead to poor financial outcomes in retirement. I hope Kiwi investors can learn from the Australian experience,” she said.
The Russell Investment Group, a global investment services firm, provides multi-manager investment products and services in more than 35 countries and has been researching investment managers for more than 30 years. Worldwide, Russell manages over NZ$149 billion in assets and advises clients representing approximately NZ$3 trillion. In New Zealand, Russell advises on more than NZ$14 billion in assets and invests around NZ$1.0 billion for NZ investors in Russell Funds. Further information about Russell Investment Group NZ can be found at: www.russell.com/nz