New Zealanders get the message

New Zealanders get the message: KiwiSaver equals long term gains - Mercer quarterly KiwiSaver Index reveals

A continuing media frenzy around KiwiSaver has led to more working New Zealanders participating in workplace savings schemes and taking responsibility for their retirement than ever before, according to Mercer’s latest KiwiSaver Index.

The findings from Mercer’s quarterly survey found despite the recent hype about share market volatility and the sub-prime crisis, increasing media attention and member communication around KiwiSaver and retirement savings, has resulted in nearly two in five (39%) respondents now participating in workplace savings schemes, up from 27 per cent observed in Mercer’s benchmark study in October 2007.

The majority of respondents (71%) continue to believe the KiwiSaver scheme will be beneficial in preparing for retirement and participation in the scheme has increased by 15 per cent since the October study. This rose from 14 per cent to 25 per cent in the first quarterly Index comparison (Jan 2008), and rose further to 29 per cent in the most recent Index findings (April 2008).

Mercer’s KiwiSaver Sentiment Index monitors current attitudes and behaviours toward the scheme among a random sample of 300 working New Zealanders aged 18 to 64 years.

Further findings suggest:

·        the proportion of Kiwis who say they’ve given some thought to retirement and have made ‘some’ preparations, has increased to 40 per cent, up from 33 per cent in October 2007;

·        paralleled with this, only 13 per cent of Kiwis now say they’ve given little thought to retirement, down from 20 per cent in the October benchmark study.

Mercer’s Business Leader in New Zealand, Mr Bernie O’Brien, said it is pleasing to see the message on planning for retirement is starting to hit home.

“The need to sacrifice now for later is cutting through for a lot of New Zealanders, with the heightened momentum leading to increased levels of participation in workplace savings schemes overall, including KiwiSaver,” Mr O’Brien said.

“A saturation of media coverage and intense communication campaigns about KiwiSaver have contributed to this shift and it’s good to see that despite recent fluctuating world markets, Kiwis are making educated decisions about funding their long-term financial future,” he said.

Mr O’Brien also noted that the study’s age group analysis of KiwiSaver members mirrors findings from the Inland Revenue KiwiSaver Evaluation six-monthly report (released in Feb 2008), finding that only 21 per cent of KiwiSaver members are under the age of 30. It also found those in the 30-49 years old age bracket perceive they are unable to afford KiwiSaver contributions due to more ‘pressing’ financial obligations such as mortgages and child raising, leading to a relatively low take-up rate of the scheme among this age group (29%).

“There is still room for improvement to encourage collective participation among New Zealanders so that younger people, and those earning lower incomes, also have the opportunity and financial knowledge to start making retirement preparations.

“Raising awareness among young people through targeted communication campaigns about the need to start saving early for retirement is critical.  The New Zealand Government also has a role to play to encourage and support lower income earners to take advantage of workplace savings schemes and ensure all working New Zealanders have the capacity to take control of their financial future,” Mr O’Brien concluded

KiwiSaver Sentiment Index results:

Following the KiwiSaver Sentiment Study conducted in late 2007, working New Zealanders were classified into four different ‘levels’ of affinity towards the scheme. These were positive and embracing, positive but reserved, sceptical and actively against. The classification is based on a number of individual ratings around prevalence or likelihood to join KiwiSaver, rating of, and perceived benefit of the scheme.

The findings present:

an increase in the proportion of those in the actively against category (24%, up from 22% in the benchmark study);
a corresponding decrease of those in the sceptical segment, dropping from 31 per cent late last year, to 26 per cent;
improvements in the opposite direction, with 36 per cent who are positive but reserved about the scheme (up from 33% in October 2007) and;
14 per cent remain positive and embracing (consistent with the initial benchmark study).
 
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