Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Out Of The Frying Pan, Into The Mire According To ASB KiwiSaver Research

Sharemarket volatility has tested the nerve of ASB KiwiSaver customers this year, with six percent switching to lower risk cash and conservative funds in March as Covid-19 saw sharemarkets plunge.

Commenting on ASB’s KiwiSaver data, Senior Economist Chris Tennent-Brown says many of those investors unfortunately missed the recovery that occurred from April onwards. “The experience may have convinced some customers that higher risk funds are not for them, but many others have not made a decision about what to do, and are still on the side lines in the cash or conservative funds.”

“2020 has been a reminder of the perils of trying to time the markets. For many KiwiSaver members, this was their first real experience of severe market volatility. Given ASB’s diversified KiwiSaver funds recorded the best calendar year returns ever in 2019, it’s understandable many were unsettled by watching their fund balances drop significantly in March. However this also demonstrates the importance of customers being clear about their investment goals and timeframes, and sticking to them.”

Mr Tennent-Brown says some people switched out of their funds, others stopped saving or held back on making investment decisions, and might now be confused about what to do.

Compared with previous major financial crises such as the 2008 Global Financial Crisis, the recent volatility abated quickly. Sharemarkets dropped 30 percent or more over February and March, but recovered rapidly and even reached new highs in recent months.

“During the Global Financial Crisis KiwiSaver was relatively new, balances were significantly smaller and customers’ own contributions made the biggest difference to their investment value. Now the market movements tend to be a bigger influence on many customers’ balances, and KiwiSavers notice this.”

Mr Tennent-Brown says regardless of market movements it’s important to keep contributing through volatility as it’s the combination of regular contributions as well as being in the right fund for the customers’ goals and timeframe that will ultimately determine how much they have in their KiwiSaver fund for retirement.”

Voluntary lump sum contributions to ASB’s KiwiSaver Scheme dropped significantly during March and haven’t yet returned to pre-Covid levels. The value of lump sum contributions dropped by two thirds initially, and is still down by a third on the value prior to the market volatility.

“It’s understandable if people stop saving to manage cashflow in times like this, but for those that can afford it, it’s useful to think about getting more for your money when prices are low.

Keeping regular KiwiSaver contributions going means customers benefit even more when markets recover.”

Despite the challenges of the year, ASB KiwiSaver research showed a record 27 percent of respondents ranked their knowledge and understanding of KiwiSaver as high, up from 22 percent a year ago. This lift coincided with an increase in the number of times people were checking their KiwiSaver, with 38 percent of respondents saying they checked their balance fortnightly or more, compared with 35 percent last quarter and 31 percent in the first quarter of the year.

“The improvement is pleasing, but there is still a long way to go. A significant number of people still describe their knowledge of KiwiSaver as poor, and as we saw around March, a significant number of people aren’t sure what to do when markets get volatile. But if nothing else, the volatility this year seems to have lifted engagement. What’s most pleasing to see over recent months has been the recovery in balances for people that stuck with their strategies and kept on making their regular contributions.”

@ASBBank @ASBMarkets www.asb.co.nz

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>

ALSO:

OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>

NIWA: 2020 - NZ’s 7th-warmest Year On Record

The nationwide average temperature for 2020, calculated using stations in NIWA’s seven-station temperature series which began in 1909, was 13.24°C (0.63°C above the 1981–2010 annual average). New Zealand’s hottest year on record remains 2016, when... More>>

Quotable Value New Zealand: Property Market Set To Cool From Sizzling To Warm In 2021

Nostradamus himself could not have predicted the strange series of events that befell our world in 2020 – nor the wild trajectory of New Zealand’s property market, which has gone from “doom and gloom” to “boom and Zoom” in record time. Even ... More>>