[GRTV] Boyle on KiwiSaver changes

Note to employers – help workers who can’t contribute to KiwiSaver.

A third of New Zealanders don’t contribute to KiwiSaver. That’s a sobering statistic, says David Boyle of Mint Asset Management as he talks to Good Returns’ Philip Macalister. In these challenging times, he says, this needs to be urgently addressed by both government and the financial services industry

Off the back of his participation in Good Returns’ KiwiSaver round table, David Boyle, head of sales and marketing at Mint Asset Management, expressed concern that so many Kiwis don’t contribute to KiwiSaver. A third of the population, he said, felt they couldn’t afford to use the scheme.

In his opening assessment, Boyle highlighted the fact that at the height of the Covid-19 crisis in March some $1.4 billion was switched from growth to income funds as investor sentiment turned cautious. But if there is a double-dip in the markets, as some are predicting, how much appetite will investors have?

In this context Boyle stressed the pressure financial advisers are under now to give Kiwis good advice, which he admitted doesn’t come cheap. Questions would need to be asked if investors felt persuaded to crystallise big losses, he said, in the process of switching from growth funds they chose for the long term instead of income.

Talk then turned to KiwiSaver itself. Bearing in mind the relatively low number of New Zealanders using KiwiSaver, was it time to turn to an Australian-style model?

While he was impressed by the scale and breadth of Australia’s system, Boyle also said there were big costs involved in maintaining it. The discussion needed to be had about alternatives. “An employer contribution without employees having to contribute could be a solution in the long run”, he added.

Now could be the time to consider a balanced fund as a default, he added, and this is where the value of good advice comes in. Both the Government and the FMA can be educators in this respect, as “investor mettle is going to be tested in the next 12 months.”