Lack of attention costs KiwiSaver default members

6 October 2016

Lack of attention costs KiwiSaver default members

Yesterday the FMA released the annual KiwiSaver report. For the first time information on default provider initiatives to assist members was included and highlighted the astonishing gap between providers. A key area of focus is the success rate of providers in switching members out of default funds. The choice of fund can make a big difference come retirement time. Unfortunately, many people stay in default funds missing out on significant amounts of money.

A 25-year-old earning $50,000 will reach 65 with about $200,000 if they stay in a default fund. If that 25-year-old was in a growth fund they would find themselves with a number closer to $360,000*.

Clearly a little help upfront can have a big impact in a person’s life. 65,000 people joined KiwiSaver through default providers this year. Most are still in a default fund meaning there are a lot of people missing out on a lot of money.

The report identified Booster as the most successful default provider when it comes to helping people into the right fund to get their savings on track. 22% of Booster default members made an active choice to move into a fund better suited to their circumstances. This is in stark contrast to other providers, some of whom sat as low as 1%. The disparity between providers naturally leads to questions about why. Booster has shared the secrets to their success.

Talk about it

Booster attempt to contact every default member to ensure they understand how KiwiSaver works and help them choose an appropriate fund. “We put a lot of focus on this.” says Booster CEO David Beattie, “We have a team of people whose only job is to call members and make sure they get their KiwiSaver working for them from day one. They help people understand what KiwiSaver is all about and what fund is best suited to them.”

Focus on it

Booster has been providing investment services since 1998 and helping people save is its main business. “Booster is a locally owned company and free from the distractions that come with being part of one of the big machines. The team know that our job is to help people get on the financial front foot so they are very focused on finding ways to connect with our members and help them make good choices. We also work with a network of non-aligned financial advisers. At any time our members have access to advice.”, says Beattie.

Talk about it more

Booster has an ongoing programme of member education initiatives. The programme aims to help boost knowledge in different ways that suit different people. Booster also proactively contact members if their accounts suggest there may be a way for them to make more of KiwiSaver. “In the past year our members have attended face to face investment seminars, webinars focused on particular financial topics and received regular updates. We do these things because we know the result is better financial outcomes for people in the long run.”, says Beattie.

ENDS

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