The amount saved in KiwiSaver schemes rose to $111.8b from $93.6b for the year ended March. File photo. Photo: 123RF
KiwiSaver funds have grown at their fastest rate in four years, surging through the $100 billion mark, but with increases in those drawing down for retirement, buying houses, hardship and leaving the country.
The Financial Markets Authority's (FMA) annual KiwiSaver report showed the amount saved in schemes rose to $111.8b from $93.6b for the year ended March, with investment returns just outstripping contributions in lifting the total.
Key numbers for the year ended March 2024 compared to previous year:
- Total funds under management $111.8b vs $93.6b
- Total membership 3.33m vs 3.25m
- Average balance about $30,000 vs $28,778
- Investment returns +$13.1b vs -$1.9b
- Total fees deducted $789m vs $664m
FMA director of markets, investors and reporting John Horner said the strong growth in savings reflected the rebound in global financial markets and savers' commitment to long term goals, and was a "coming of age for the scheme".
"Contrasting this year's report to previous years, we can see how investor behaviour has changed over time, together with the profile of the funds being selected."
Close to half of savings were in growth funds - more than doubling in three years - while there had been a continued shift away from conservative funds.
"With KiwiSaver in its 17th year, investors have become more comfortable with the long-term nature of KiwiSaver. We believe this is why almost half of all KiwiSavers have moved towards more growth-oriented funds."
Balanced funds have been the default for new entrants to KiwiSaver since 2021 from the previous conservative setting.
A breakdown of investments showed 55 percent in local and overseas shares, about 30 percent in fixed interest, with the balance spread through cash, commodities, and property.
Fees rise as markets rise
KiwiSaver fees increased after the previous year's decline, as a rise in the amount invested, buoyant markets, and more active management resulted in a 19 percent increase to $789m.
"It's still early days on our work on value for money, we're really keen that providers are very clear about the fees that they charge and the circumstances in which those fees can go up or down."
"It's also important to understand what services are offered and what KiwiSavers receive for those fees."
The report showed the impact of tougher economic conditions, with hardship withdrawals rising 60 percent to $264m. The amount withdrawn for first home purchases was up by a third to $1.2b.
Overall withdrawals from the scheme totalled about $5b, of which $3b was from those over 65.
Horner said the FMA wanted to reduce the number of non-contributing members, about 1.3 million people, some of whom would be those over 65 gradually drawing down their funds, but others were at the early stages of their working lives.
The authority was also working to improve liquidity risk, to ensure providers were taking precautions to strengthen their funds in the face of financial volatility and downturns.