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Low risk and happy, NZers seeking to save more

28 January 2008

Low risk and happy, NZers seeking to save more

An international survey by AXA has both good and not-so-good news about New Zealanders’ attitudes to saving for retirement.

The good is that it suggests New Zealanders are the happiest people in relation to their retirement prospects, among those of the 18 OECD countries surveyed. Furthermore, more Kiwis say they are preparing for retirement than in any previous Retirement Scope survey - now more than three in four (78%) compared with just two in three (66%) in 2004.

AXA Retirement Scope is an annual survey of the attitudes towards retirement of around 18,000 people around the world. It includes more than 600 respondents in New Zealand.

The surveying was undertaken prior to the launch of KiwiSaver, and thus the number who might now say they are preparing for retirement is likely to have increased further, AXA Chief Executive Ralph Stewart said.

The survey showed that 96% of working Kiwis and 95% of retirees reported being either “happy” or “very happy” in relation to their retirement prospects. The next happiest countries were, in order, Belgium, India, Switzerland and Australia.

Mr Stewart said that although more New Zealanders said they were preparing to save for retirement, there appeared to be a “worrying risk aversion” among investors and inadequate appreciation for risk/reward principals.

The results showed that 75% of working Kiwis preferred investments with little risk and low returns. At the same time, retirees said they believed a good income in retirement was more important than good health.

“It’s a concern that three out of four New Zealanders of a working age seek to minimise risk in their investments, when longer-term investing for retirement is about balancing risk and reward,” Mr Stewart said.

“There is a warning in this. New Zealand will struggle to become a richer country, and New Zealanders better off in retirement, unless we are more open-minded about how we invest”.

He said the collapse of finance companies over the past 18 months was certainly a factor in this.

“Perversely it has driven people from high risk investments with moderate returns to low risk positions with low returns, neither of which are helpful in meeting long-term financial needs.”

Mr Stewart said the launch of KiwiSaver would help increase the financial literacy of New Zealanders and, with it, their tolerance of periods of lower returns and falling prices, as on equity markets this year.

“The Australian experience following the introduction of compulsory savings has been a steady rise in people’s understanding of market cycles and acceptance of volatility in exchange for strong long-term gains.”

ENDS

© Scoop Media

 
 
 
 
 
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