KiwiSaver and COVID-19

Peter Forster
General Manager Wealth
5 MIN

BNZ’s General Manager of Wealth Peter Forster answers some of the most frequent questions we’ve been receiving about KiwiSaver in recent weeks in response to COVID-19.

My KiwiSaver balance has always just gone up, why has it gone down recently?

Your BNZ KiwiSaver Scheme account is not the same as a bank account. When your money goes into the BNZ KiwiSaver Scheme funds (except for the Cash Fund), it is invested in a range of assets, such as treasury bills, shares in companies, and bonds. These assets can go up or down in value which means the value of the BNZ KiwiSaver Scheme funds, and therefore your account, can also go up or down in value.

Over the past decade we have seen a long period of investment markets generally going up in value. In recent weeks, the impact of COVID-19 has caused some assets to go down in value significantly, and this has flowed through to most BNZ KiwiSaver Scheme account balances.

Which fund should I be in to weather this difficult period?

You shouldn’t choose a fund in reaction to short term movements in investment markets – even when the movements are big, like we’re seeing now. Chances are you’ll make your decisions after the markets have already started to move, which means your account balance will likely still go down and you may miss out on some of the benefit when markets do start to recover again. This is why we recommend choosing the right fund for you based on your long term goals.

Investing is a trade-off between risk and expected return. Each of the funds in the BNZ KiwiSaver Scheme has a different level of risk and expected return. There is a range of funds so you can choose the one that suits you best.

Funds that are expected to deliver higher returns over the longer term, like the Growth Fund, will also be most impacted in times like this. Funds that are least impacted in times like this, like the Cash Fund, will likely deliver lower returns over the longer term. So whether you want to focus on how big your balance could grow to at retirement, or whether you’re more interested in a smooth ride along the way, there is a fund for you.

This might feel a little complicated – so to make it easy we have a simple, three question quiz that can help you make sure you are in the right fund for you. If you’re already in the right fund for you then our advice is to take a deep breath and resist any urge to change funds.

Can I take all my money out of KiwiSaver?

Generally speaking, you can only withdraw money from your KiwiSaver account to purchase a first home or when you turn 65. If you are over 65 then you need to consider your investing timeframes and attitude to risk like any other investor.

What if I really need the money now?

If you are experiencing significant financial hardship you may be able to withdraw all or some of your available BNZ KiwiSaver Scheme account balance (with the exception of Government contributions).

Applying for a BNZ KiwiSaver Scheme significant financial hardship withdrawal involves showing us that you’ve explored all other ways of alleviating your hardship, and you should be aware that the Government considers these to be a last resort for those who are experiencing financial stress. For example, there are other ways you may be able to get assistance, such as:

  • Government assistance: The Government has introduced a range of assistance measures, including wage subsidies and protections for renters and tenants. Information about the Government’s COVID-19 support package is available here.
  • Bank assistance: Banks are also offering assistance to those struggling financially. This includes home loan repayment deferrals, and other hardship variations on credit cards and personal loans. Information about the support BNZ is offering its customers is available here.

Applying for a KiwiSaver hardship withdrawal usually also requires completing a statutory declaration, and we understand that this may not be possible given the current restrictions on the movement of people. However, we’re now able to accept statutory declarations that have been completed remotely, via video call. Some law firms may be able to assist you with this process free of charge.

If you’re unable to complete a statutory declaration remotely via video call, or get your address or ID documents certified, we may still be able to process your application. We’re currently working on a process that’ll allow us to do this.

More information about BNZ KiwiSaver Scheme significant financial hardship withdrawals is available here.

What is BNZ doing to manage my money during this time?

BNZ has an in-house team of experienced investment experts, uses independent asset consultants, and has access to some of the world’s largest asset managers who are all working together to safeguard the assets of the BNZ KiwiSaver Scheme.

BNZ has a comprehensive Business Continuity Plan that will allow the team to continue managing the Scheme through this period.

Are there investing opportunities as a result of all this uncertainty?

Yes. One obvious opportunity is the chance to buy assets at cheaper prices. If you are making regular contributions to your BNZ KiwiSaver Scheme account then we will be continuing to buy more investments on your behalf. Where assets are cheaper than they were before, your fund is able to buy more of them. So, if you’re able to take a longer-term perspective, this puts you in a better position to take advantage of any recovery in markets.

Our investment experts are also looking for any opportunities that they can take advantage of to help generate the best possible returns during this period.

Is the Government taking my money to help pay for its response to COVID-19?

No. The money in your KiwiSaver account belongs to you. The Government cannot take it away. BNZ can’t take it away either. The assets of the BNZ KiwiSaver Scheme are not the property of the Bank and do not sit on the Bank’s balance sheet.

The BNZ KiwiSaver Scheme assets are held for its members by a subsidiary of The New Zealand Guardian Trust Company Limited – the independent Supervisor of the Scheme.

When will this all be over?

We expect this period of uncertainty (and increased ups and downs) to continue until the spread of the virus has been contained. At this stage, it is impossible to say when that might be.

Originally published on 25 March, 2020, and updated on 9 April, 2020.

BNZ Investment Services Limited, a wholly owned subsidiary of Bank of New Zealand, is the issuer and manager of the BNZ KiwiSaver Scheme. A product disclosure statement is available at bnz.co.nz or at any BNZ branch.

The information in this article is provided for general purposes only, and is a summary based on selective information which may not be complete for your purpose.  To the extent that any information or recommendations in this article constitute financial advice, they do not take into account your financial situation or goals and is not intended as personalised financial advice. While BNZ has made every effort to ensure that the information provided is accurate, you should not rely on this information to make any financial decision without first having sought advice specific to your circumstances from an authorised financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.

Peter Forster
General Manager Wealth
Peter has nearly 20 years’ experience in financial services across Australia, New Zealand and Asia. He has led Bank of New Zealand's Wealth business since August 2018.