Wealthy KiwiSaver investors lured to growth funds, others should follow

Wednesday 25th November 2009

High-net-worth KiwiSaver investors with ING New Zealand are increasingly being lured to growth funds, having benefited from "unprecedented volatility" in global financial markets, according to ING New Zealand.

Some 39% of savers ING surveyed allocated their KiwiSaver portfolios into growth funds, according to the ING Investor Dashboard Survey, compared to less than 10% of other investors, many of whom are in default schemes because they haven’t made an active choice about their retirement savings.

"This particular demographic group, on average, has got a higher allocation in growth assets than the rest of the market," said David Boyle, head of KiwiSaver distribution. "These people have taken a long-term view with their funds" and are reaping the benefits of the unprecedented volatility in markets over the past two years, he said.

With a tighter labour market unemployment expected to rise to 5.6% in the June Household Labourforce Survey, out on Thursday, ING has fielded more inquiries from investors about taking contribution holidays from KiwiSaver and what impact redundancy might have on their savings scheme, Boyle said.

The survey found 87% of investors polled agree the scheme's long-term stability hinges on it remaining unchanged, with 54% supporting a compulsory scheme. Some 95% of investors said they will leave their portfolio unchanged in the next quarter.

Boyle said the National-led government’s initiative in cutting the minimum employer contribution to 2% had helped boost the number of people on low wages buying into the scheme, and it probably played a role in lifting KiwiSaver uptake to more than 1.1 million people.

“As New Zealanders become more increasingly comfortable with KiwiSaver, we would hope to see more people taking an active interest in the funds they have invested in,” he said.

Lifting the nation’s financial literacy and ensuring the superannuation portability agreement with Australia allows for the smooth transition of funds across the Tasman are key areas that Boyle predicts will boost investors' interest and participation in the scheme.

BusinessDesk.co.nz

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