New Kiwisaver education plan coming

A new education campaign is designed to ensure 2.5m Kiwisavers get better information about investments.Photo / NZ Herald

The Financial Markets Authority is worried some KiwiSavers don't know enough about where and how their billions of dollars are invested.

The authority will start a campaign in the next few months to help ensure almost 2.5 million savers have the right information about investments worth more than $28 billion.

Figures showing the rapid growth of KiwiSaver funds - and big increases in the number of withdrawals by first-home buyers and for significant financial hardship - were released yesterday by the authority.

"One of the challenges is to ensure that investors are informed and have an understanding of the products and that providers are giving investors the overall level of support and information," said the FMA's director of markets oversight Garth Stanish.

There were signs that not everyone understood the scheme and a lack of consistency among providers contributed to this.

"There are some indications people aren't completely on top of the fact they're dealing with a long-term investment and not a short-term savings account," Stanish said.

"In order to have investors engaged in this space you need to have consistent and comparable information about KiwiSaver. That is certainly an important area for us."

Because of the size of KiwiSaver and the big chunk it had of the New Zealand sharemarket, it was a strategic priority for the FMA, especially in relation to investor decision-making, sales and advice.

Investment returns doubled to $3 billion in the year to June 30 but he warned that investors can't expect the same performance in the current year.

"Higher returns reflected an extended period of positive market conditions, which have peaked during the last 12 months. However, those levels of positive returns are unlikely to be seen again for some time and investors need to be prepared for a period of lower returns and increased volatility ahead," Stanish said.

Withdrawals for first-home buyers were up 26 per cent from $169 million in 2014 to $214 million this year. Withdrawals for significant financial hardship were up nearly 40 per cent to $43 million.

Final withdrawals made by people over the age of 65 and who had been members for at least five years also increased steadily for the third consecutive year, up 12.7 per cent to $422 million.

Compulsory contributions from members increased to $2.38 billion for the year followed by employer contributions of $1.47 billion and the Government contributed $927 million.

Nearly 200,000 new members joined KiwiSaver during the March 2014-2015 year, taking total member numbers to 2.5 million.

Just on $12.7 billion, or 44.7 per cent of total KiwiSaver funds are in low risk, conservative or cash funds, compared with 47 per cent in 2014.

The total number of members involved in scheme transfers this year was 177,000, after excluding corporate mergers. This was consistent with last year's figure, which on a like-for-like basis was 170,000.