Inside Money : As KiwiSavers holiday, Tower goes out to play

In its latest monthly analysis of the IRD KiwiSaver member stats Tower Investments highlighted the growth in holiday-takers.

Up 46 per cent in a year, according to head of Tower Investments, Sam Stubbs.

And it's true that as at February this year 56,261 KiwiSaver members had elected to take a break from contributions compared to 38,653 'on holiday' 12 months earlier.

But is that cause for concern?

"KiwiSaver members contemplating active contribution holidays because household finances are tight will need to weigh up carefully the opportunity cost of potentially smaller retirement savings later on," Stubbs said.

Well, yeah, but there's the small matter of feeding your children NOW to think about too. I haven't seen any research on the reasons why people are choosing to take some time off KiwiSaving but I reckon the answers would be obvious - something to do with dire fiscal position of households in question.

In this the government has proven itself to be a role model for its citizens, halting contributions to the New Zealand Superannuation Fund when times got tough.

(A quick peek at the latest NZ Super Fund returns reveals it grew 22 per cent from July 2010 to the end of this February - talk about 'opportunity cost'.)

The more interesting statistic, however, in Tower's presentation concerns the growth rate of KiwiSaver membership, which has dwindled to just over 1 per cent per month, compared to about 4 per cent a couple of years ago (see graph above).

That's a logical trend, of course, the percentage growth rate inevitably has to slow as KiwiSaver schemes expand. In fact, the actual numbers of people joining KiwiSaver, according to the IRD, has remained pretty steady with about 20,000 new sign-ups each month.

But while there's still some growth to be eked out of KiwiSaver new enrolments the overall trends suggest the 'low hanging fruit' (a marketing department term) have already been plucked.

Providers are now eyeing up each to boost their growth rates. Tower, for example, last year openly made a grab for Fidelity, which owns one of the fastest-growing KiwiSaver schemes, and was rumoured to have been doing 'due diligence' on the other fast-breeder KiwiSaver, Huljich.

However, since its 35 per cent shareholder, GPG, announced plans to sell down its assets this February, Tower is now officially in play.

In a nice turn-of-the-tables move Fidelity expressed interest in buying parts of Tower.

Rumours suggest that the more likely Tower-buying candidate is BNZ, currently the only major bank not to offer its own KiwiSaver scheme. Now that BNZ's parent, the National Australia Bank, doesn't have to waste all that money buying Axa, Tower could make do as a little snack for the Australians.