New research from the forthcoming Bank of New Zealand (BNZ) Wellbeing Survey shows that not having enough savings for retirement is the biggest driver of financial anxiety for New Zealanders, with more than half concerned that we will not have enough to support ourselves in retirement.
This adds to recent reports showing the average KiwiSaver balance is too low at around $19,500, that we aren’t contributing enough, and that too many people are in the default conservative funds when they need to be in growth ones.
BNZ Chief Customer Officer Paul Carter, says, “Customers tell us they know they need to do something about their KiwiSaver, they just don’t know what, and they’re looking to their bank to help.”
“The onus is on financial institutions to do everything we can to remove obstacles, to make things simpler, and give people better tools and advice. That’s why we’re making major changes to our KiwiSaver offering,” said Mr Carter.
From 1 May 2019, BNZ has radically simplified and reduced its fees, removing the $1.95 monthly member fee – the first of the big four banks to make this move – and reducing management fees.
Table of fee changes
|CASH FUND||FIRST HOME BUYER FUND||CONSERVATIVE FUND||MODERATE FUND||BALANCED FUND||GROWTH FUND|
|Before 13 May||0.30%||0.50%||0.58%||0.90%||1.00%||1.10%|
|From 13 May||No change||No change||0.50%||0.58%||0.58%||0.58%|
“These changes remove important barriers to choosing the best fund for a customer’s needs, with the moderate, balanced, and growth funds now all on the same low fee. By this action, we’re removing fees as a consideration when deciding what fund to go into,” says Carter.
Under the new structure, a person with $20,000 invested in the BNZ Growth fund would have their fees more than halved, from $243 to $116, which means more in their retirement nest-egg or helping them get into their first home faster.
Removing barriers is more than fees, it’s also about helping customers make good decisions about which fund to go into, Mr Carter said.
“We’ve re-written all of our disclosure documents and communications in plain English. We’re rolling out new tools for our bankers to help them have better conversations with customers and help them pick the right fund for their needs. We’re also putting more tools in the hands of customers, with calculators to help compare the different funds and returns over time.
“Joining and managing KiwiSaver needs to be as easy as possible, and existing customers can join online or via their BNZ app in less than a minute. Making additional contributions is easy and can also be done online or on the app, and you can change your fund type online too. We’re continuing to work on new digital tools to bring new features to our customers too,” says Carter.
BNZ is also changing the way the underlying investments are managed, shifting to an index management approach for international assets, while keeping the actively managed approach for Australasian investments.
What the BNZ Wellbeing survey found:
- 55% of all New Zealanders think they won’t have enough to retire on
- 30-49-year olds who are the most pessimistic about having enough, with 63% expecting to fall short
- The number of people in the highest income group who said they would fall short was about the same as that in the lowest income group.
The full BNZ Wellbeing Survey results, a sample of 1000 New Zealanders asking them about their financial wellbeing, will be available in the next few weeks.