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We need to talk about retirement
Covid-19 forced many New Zealanders to think about their financial security – but with uncertain economic times ahead and an ageing population to consider, it’s time for a sustained, national conversation about retirement.
By Miriam Bell
That was the verdict of a panel discussing retirement in the post-pandemic world on day two of the Financial Services Council’s Generations Digital conference.
Moderated by TVNZ’s Jack Tame, the heavy-hitting panel was made up of the FMA’s Rob Everett, Retirement Commissioner Jane Wrightson, University of Auckland professor Susan St John, Trustees Executors chief executive Ryan Bessemer, Mercer’s Will Burkitt and CoreData’s Andrew Inwood.
While Covid-19 has thrown some focus on retirement and, specifically, financial security in retirement, there have long been looming issues in this area – issues which governments of all persuasions have been loath to address.
One of the major issues is that New Zealand’s ageing population is getting bigger and living longer. That’s set to put increasing pressure on NZ Superannuation, especially as many people are not in situations where they can save adequately themselves.
St John pointed out this problem is particularly heightened for women, who often take time out of the workforce and saving to care for children and/or ageing relatives, and for young people, who have student debt and house price issues to contend with.
The panel discussed various ways of trying to address the problem. These included making Kiwisaver compulsory, providing tax relief to assist saving, means-testing NZ Super, and the development and provision of a better range of financial products targeted at individual consumers.
But the one potential solution that the entire panel agreed on was working to improve the financial literacy of New Zealanders, which includes raising the profile of retirement and what it means for individuals (as there is no one-solution-fits-all).
Inwood said driving up financial literacy so that people understand the outcomes of their actions was critical, while Bessemer said people need to learn to think of saving as something you should do for your entire life.
Some programmes to improve financial literacy are underway, Wrightson said. These include further developing the Sorted website, including creating a version targeted at women, and boosting financial literacy education in schools.
“It’s also an interesting segue into work that we are doing with the National Strategy for Financial Capability,” Wrightson said.
“The national strategy is a way that the industry, community and government can work together on common financial goals across New Zealand.”
Wrightson encouraged industry to engage with the Commission in any way possible as no one sector of society could come up with the necessary solutions alone. Everett said he was speaking from the same page but added that getting consistent messages out to people about planning for their future is also critical.
Industry insight: insights from the FMA
The financial services sector was in the midst of a tidal wave of regulatory change – and then Covid-19 hit. But the sector’s regulator has been encouraged by how providers have dealt with it all.
By Miriam Bell
Financial Markets Authority (FMA) chief executive Rob Everett said he had been heartened by the response of financial providers to the crisis prompted by Covid-19.
That was especially true given the sector was already working through a raft of different regulatory changes and reviews involving the FMA, the Reserve Bank and the Commerce Commission.
With Covid-19 came a time of uncertainty and market volatility and that prompted a sudden increase in anxiety in consumers worried about their financial products, he said.
“KiwiSaver, for example, saw a huge surge in interest. There was a 54% increase in consumers switching their funds. But the industry and regulators have been consistent with their messages not to panic and to stay the course on this.”
The crisis prompted the industry to step up their customer service – under pressure - and really engage with, and focus on, looking after consumers, particularly vulnerable ones.
Everett said this shows the value of direct contact between consumers, providers and regulators and they hope to see a continued focus on this operating in the best interests of the customer.
This type of provider focus on the needs of the consumer also aligns with the goals and spirit of the regulatory changes which the sector is working towards, he said.
“It’s about getting good outcomes for consumers and ensuring providers can deliver them. The FMA is committed to working with providers to establish that framework.
The FMA doesn’t under-estimate the challenges, both regulatory and Covid-19 related, currently being faced by the industry, Everett added.
“There’s hard yards ahead – especially given the difficult economic situation that New Zealand, and the world, is in. We get that.
“But we are confident that our goals and interests are aligned with those of providers and that New Zealanders will benefit from a strong and customer focussed financial services industry.”
The Covid storm - is there a silver lining?
A wide spectrum of industry insights share lessons learned from the disruptions of Covid-19.
By Daniel Smith
This session saw a wide array of industry insiders opening up about the challenges that their varying companies faced during the two covid lockdowns, as well as their plans for the future.
Kylie Bryant, country manager for Bravura had a hands on experience of the challenges of lockdown. She started in her new role during lockdown and transitioning to a new position via the internet raised some issues. But in overcoming these challenges she and the team at Bravura developed new systems which allowed employees to be more flexible and more productive.
While it is early days the international team in the wider Bravura network are watching closely to see if they can implement the new structures across their global network.
Paul Carter, chief customer officer at BNZ said that “we aren’t going back to the old ways, nor should we”. The developments of digital technology during the lockdowns were well received by both customers and employees.
He said that everyone at BNZ has “learnt so much over lockdown, both personal and organisational learning”. These lessons are ones that he is keen to take with him into the future.
Brynlea Hunter-Morpeth, chief officer of people and culture at AIA, said that the key focus is empowering employees. This takes different forms as Hunter-Morpeth says “there needs to be different options for different people”. Catering for different personality types has been a big learning curve for AIA, “introverts loved lockdown, extroverts were climbing the walls”.
Moving forward, creating a work culture that meets people on their level is key for AIA.
Ashley Gardyne, senior portfolio manager at Fisher Funds says that the transition into lockdown showed him that “while systems were good to go, communication needed some work.” This was especially relevant when Fisher Funds clients were clamouring for advice after the 30 percent crash in the US markets. Gardyne says that “Fisher Funds for the first time began utilising webinars to engage with clients. We quickly found that we were getting far more engagement through the digital platforms than through previous in-person events”.
For all of these industry insiders it seems that the “new normal” is here to stay. But what needs to be in the forefront of thinking is making sure the human element is looked after as much as the digital.
National spokesman supports compulsory KiwiSaver
By Daniel Smith
Commerce minister, and Labour MP, Kris Faafoi goes head to head with National commerce spokesman Andrew Bayly.
This political keynote saw Jack Tame liaising between Labour Minister Kris Faafoi, calling in from the campaign trail, and the National party’s spokesperson for commerce and revenue Andrew Bayly.
Faafoi kept his comments to the fact that the recent disruptions of covid have shown there is a need for greater financial resilience in New Zealand. The way he seeks to improve this is through education. The minister is pleased with the work that his government has done at the grassroots level and says he would be happy to continue with this portfolio should Labour continue to lead post-election.
National party’s Andrew Bayly was more outspoken, most notably being drawn out by Tame to saying that he would like to see KiwiSaver become compulsory for all New Zealanders.
KiwiSaver is a big concern to Bayly who commented that 1.2 million people are not in the program and half a million remain in default funds. He believes that the question of how to engage these people is crucial for whoever holds the commerce portfolio. Bayly’s answer is to make KiwiSaver compulsory.
One viewer question raised that Bayly’s comments on the importance of sticking with the course of KiwiSaver run against his party’s recent policy of allowing people affected by covid related job losses to draw up to $20,000 from their KiwiSaver to start their own business. Bayly replied that the party is not recommending that everyone do this, but they wanted to give those who did want to do this the option to.