KiwiSavers urged to think long term
Cautious KiwiSavers are ignoring a nudge from the funds industry to consider riskier funds, and appear equally cool on calls to pitch in more money.
The second ASB KiwiSaver survey found people were more likely to be invested in cash-and-bond-heavy conservative funds than they were six months earlier, despite publicity aimed at getting younger savers to consider putting more money into shares.
Most people admitted that they needed to save more, but nearly 90 per cent of respondents said they had no plans to change their level of KiwiSaver contributions.
"The majority of people know they need to save more for retirement but the vast majority - 9 in 10 - aren't planning to do anything differently.
"We are still heavily skewed, if not more heavily skewed, towards conservative portfolios," ASB's executive general manager of wealth and insurance, Blair Turnbull, said.
Fund-switching data from the Financial Markets Authority shows Kiwis shuffled more of their retirement money - a net $36 million - into perceived "safe haven" funds than they pulled out in the year ending March.
At the same time, people shifted a net $41m more out of share-heavy growth funds than they moved in from less volatile funds.
Cash-only funds - the most conservative option of all - gained a net $18m from savings transfers.
Calls from KiwiSaver providers and financial advisers for people with decades of work ahead to consider a share-heavy option - if they can cope with volatility - are up against figures showing conservative funds returned more than riskier funds during KiwiSaver's first five years.
The Eriksen Master Trust Survey shows growth funds lost 2.3 per cent, annualised after tax and fees return for the past five years, balanced funds made 0.5 per cent and conservative, 2.6 per cent.
But advisers such as Turnbull say that, in the long term, growth options should perform better. "We don't have a GFC every year," he says.
What we want v what we do: Respondents believe on average they will be retired for 23 years, with almost 80 per cent planning to retire after they turn 65.
Two-thirds estimate they will need less than $50,000 income a year when retired, with 43 per cent estimating they will need $30,000.
At the average savings rate of about $50 a week, a 35-year-old ASB KiwiSaver Scheme investor will accumulate $70,000 by the time they retire.
Nearly 70 per cent admit they need to save more.
43 per cent of KiwiSaver members contribute the default 2 per cent of salary.
13 per cent plan to alter their contribution rate in the next year.
Source: ASB KiwiSaver Survey is based on 786 online responses gathered from July to September.