Kiwis saving more as contribution changes picked up

  • 6% of respondents have taken up the new contribution rates in the last few months
  • 64% said they needed to save more for retirement, up from 58% last quarter
  • Those saving more than 6% of their income had increased from 39% last quarter to 41%

Early evidence from the latest ASB KiwiSaver survey shows Kiwis are starting to take advantage of the new 6% and 10% KiwiSaver contribution rates, and saving more of their income.

In April, the government added 6% and 10% as KiwiSaver contribution options, on top of the already available 3%, 4% and 8%. In the quarter since this change, 6% of survey respondents collectively have taken up the new options, with ASB head of KiwiSaver Aidan Vince saying he expected this to continue.

"It's really encouraging to see some New Zealanders have already begun to look at whether these new options would help them reach their savings goals faster. The changes also show more people are taking an interest in their KiwiSaver and making sure it is working for them. These new rates have only been available for a few months so we're expecting more people to switch in the coming months," says Vince.

"Over the last few years, we've seen a trend towards New Zealanders who are engaged with their KiwiSaver looking to invest more, however we're still seeing the number of respondents in the default 3% rate sitting stubbornly at around 38-39%," says Vince.

The contribution changes coincided with a slight increase in the amount of people thinking they needed to save more for retirement - with this number lifting from 58% last quarter to 64% this quarter - and an increase in the amount people were saving.

The results showed people who were saving more than 6% of their income had increased from 39% last quarter to 41% this quarter - another positive indicator.

"One of our main goals as a KiwiSaver provider for New Zealanders is to help people work out how they can best achieve their savings goals - whether that be getting into a first home or saving for retirement. The more people can save, the easier these goals will be so we're really encouraged by these results," says Vince.

Despite the positive savings changes, the survey also revealed a quarter of respondents relied on advice from friends or family on how much they needed to save, rather than advice from a bank or financial advisor, or other reliable tools.

Asked how they had calculated how much they would need for retirement, 25% of those surveyed said they had settled on this number after advice from friends or family, while 16% had estimated or guessed and a further 16% had based this on information picked up from media.

"With this being Money Week, it's a good time to remind people that there are a range of free tools and solutions available to them. Just 11% based their view on advice from a bank and a further 11% said advice from a financial planner, so we're encouraging people to go into your local branch or pick up the phone and call your KiwiSaver provider so they can help make sure you are on track to meet your goals," says Vince.

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