Kiwisaver returns, withdrawals soar

The number of KiwiSaver members and returns went up sharply in the past year. Photo/NZ Herald

KiwiSaver investment returns and withdrawals - including those for significant financial hardship and buying first homes - reached all-time highs in the past year.

Investment returns doubled to $3 billion but the Financial Markets Authority's (FMA) warns that investors can't expect the same performance in the current year.

The FMA latest report into KiwiSaver activity shows the pool of retirement savings is up 33 per cent, to just under $28.5 billion. This is similar to last year's growth and KiwiSaver funds now represent a significant portion of the nation's wealth, equal to 12 per cent of gross domestic product.

The report is based on the statistical returns of all scheme providers and shows that investment returns doubled from $1.5 billion last year to $3 billion in the past year to June 30.

KiwiSaver withdrawals also increased significantly when compared to previous years. 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.

The FMA's director of markets oversight, Garth Stanish, said the strong overall returns were a positive result for most KiwiSaver members, but market levels had declined since the period in the report.

"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," said Stanish.

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 to 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 - on a like-for-like basis the number of transfers last year was 170,000.

In the next few months the authority will publish its KiwiSaver sales and advice monitoring report as part of a focus on the scheme.

It will also issue guidance on the reporting of fees and the use of risk indicators and descriptions of managed funds.

See the latest KiwiSaver report here: