KEY POINTS:
Automatic sign-ups in KiwiSaver by people starting new jobs are falling away as the recession bites.
Companies operating the six "default" KiwiSaver schemes, which are randomly allocated new sign-ups who do not actively choose which scheme to join, say their inflows are slowing down as hiring dries up.
And the numbers taking "contribution holidays" because of financial hardship or other reasons are rising, although at last count at the end of August they still accounted for only 0.7 per cent of KiwiSaver members.
In contrast, people joining the scheme actively, rather than being signed up automatically when they start a new job, are still holding up relatively well.
Inland Revenue Department figures show that the monthly growth rate in KiwiSaver membership has declined steadily from a peak of 15 per cent in April, when compulsory employer contributions started.
Membership grew by only about 3.5 per cent in both August and September and appears to have slowed to below 3 per cent in October, judging by an updated figure of 827,000 members at October 20 announced by Finance Minister Michael Cullen.
Andrew Gawith of Wellington-based Gareth Morgan KiwiSaver said this was partly just a natural maturing of the scheme, which enrolled 28 per cent of all adults aged 18 to 64 between its launch on July 1 last year and the end of September.
"Because it's a voluntary scheme, you're going to run out of people willing to join, so the growth is going to slow," he said.
ASB Bank, which led the KiwiSaver market in FundSource's September survey with $340 million under management, said there was a clear difference between voluntary and "default" trends.
"Direct [voluntary] enrolments ... are continuing at the same rate they had when the scheme was launched," said Greg McAllister of ASB Group Investments. "Our batting rate has remained static.
"It's the IRD default enrolments that have dropped in the last two months. There could be two reasons - there could be reducedhiring or lower job churn, so people are not moving jobs at the moment."
Another default provider, Axa, reported an increase in applications for contribution holidays for hardship reasons in the past two months.
Westpac economist Dominick Stephens said there was always a slowdown in people switching jobs in a recession, and it was likely that people were not making big financial commitments at a time when their future income looked shaky.
"I wouldn't be surprised if October was weak because of fear about markets," he said.
"But I enrolled my [preschool] children in October because I thought shares were really cheap. I enrolled them both in growth funds."
Children and other non-employees can get a $1000 kickstart from the Government immediately and most schemes do not require them to make any regular contributions, allowing them to earn returns on the $1000 effectively free.
Saving for Retirement:
Jan 31 - 414,144 Members
Feb 29 - 469,330 Members (+13.3% Monthly Growth)
Mar 31 - 521,247 Members (+11.1% Monthly Growth)
Apr 30 - 600,043 Members (+15.1% Monthly Growth)
May 31 - 673,942 Members (+12.3% Monthly Growth)
Jun 30 - 716,637 Members (+ 6.3% Monthly Growth)
Jul 31 - 758,860 Members (+ 5.9% Monthly Growth)
Aug 31 - 785,095 Members (+ 3.5% Monthly Growth)
Sep 30 - 812,018 Members (+ 3.4% Monthly Growth)
Oct 20 - 827,000 Members (+ 1.8%* Monthly Growth)
*Growth rate extended to full month would be 2.8 per cent.
Source: Inland Revenue.
www.kiwisaver.govt.nz