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FMA 2015 KiwiSaver report

FMA 2015 KiwiSaver report shows investment returns and withdrawals reach all-time highs

The Financial Markets Authority’s (FMA) latest report into KiwiSaver activity shows funds flowing into KiwiSaver at an all-time high during the 12 months to 31 March 2015. Investment returns were the biggest component of positive fund flows while the level of withdrawals also increased to the largest level since KiwiSaver began.

KiwiSaver has grown rapidly in recent years. This year’s report shows total assets in the KiwiSaver pool of retirement savings are up 33%, to just under $28.5 billion. This is similar to last year’s growth and KiwiSaver funds now represent a significant portion of the nation’s wealth, equal to 12% of NZ GDP.

The statistics are included in the FMA’s annual KiwiSaver report, released today, as part of its statutory obligations under the KiwiSaver Act 2006.

The report is based on the statistical returns of all scheme providers and shows that investment returns doubled from $1.5 billion last year to $3 billion in this year’s report.

KiwiSaver withdrawals also increased significantly when compared to previous years. Withdrawals for first home buyers were up 26% from $169 million in 2014 to $214 million this year.

Final withdrawals made by people over the age of 65 and who had been members for at least five years also increased steadily for the third consecutive year, up 12.7% to $422 million.

The FMA’s director of markets oversight, Garth Stanish said the strong overall returns were a positive result for most KiwiSaver members, but market levels had declined since the period in the report.

“Higher returns reflected an extended period of positive market conditions, which have peaked during the last 12 months. However, those levels of positive returns are unlikely to be seen again for some time and investors need to be prepared for a period of lower returns and increased volatility ahead,” said Mr Stanish.

Compulsory contributions from members increased to $2.38 billion for the year followed by employer contributions of $1.47 billion and Crown contributions of $927 million.

Nearly 200,000 new members joined KiwiSaver during the March 2014-2015 year, taking total member numbers to 2.5 million.

$12.7 billion, or 44.7%, of total KiwiSaver funds are in low risk, conservative or cash funds, compared to 47% in 2014.

The total number of members involved in scheme transfers this year was 177,000, after excluding corporate mergers. This is consistent with last year’s figure - on a like-for-like basis the number of transfers last year was 170,000.

KiwiSaver is a major focus for the FMA and it will continue paying specific attention to the level of information, support and access to financial advice that is provided to members when they are presented with the option to transfer their KiwiSaver scheme.

In the months ahead the FMA expects to publish its sales and advice monitoring report, which will be directly relevant to a number of features of the FMA’s focus on KiwiSaver. There will also be guidance on issues such as the reporting of fees and the use of risk indicators and descriptions of managed funds.

The full report can be viewed here.


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