KiwiSaver members open to sacrificing more for future gain

There appears to be an appetite among KiwiSaver members to take home less pay now in order to boost their retirement savings, according to a survey by investment platform Sharesies.

Sharesies asked investors who are also enrolled with a KiwiSaver provider - any provider, not just Sharesies - how they would feel about a small drop in their pay for future gains.

“Almost 80% of people told us, ‘yeah, I get it, I have to put away more now than I want to have more later’ and I support them in that,” says Matt Macpherson, Sharesies’ GM of Super and Funds.

The response was the highest consensus among the questions asked in the survey, says Macpherson, but interestingly, just 20% of survey participants supported raising the minimum contribution rate.

At the same time, 67% of participants told Sharesies that the ideal contribution rate is higher than the current 3%, although the survey report commented that it could be an indication that people are unaware of the current settings, as when asked about lifting the minimum from 3% to 6%, there was 56% support for a significant increase to the minimum.

Matt Macpherson says the phrasing of the questions could explain the shift in sentiment, or just uncertainty around what future retirement will look like for people.

But he says it does demonstrate the importance of KiwiSaver members being actively engaged in their retirement planning and not waiting to be told what to save. 

“Instead of just outsourcing the thinking to whoever is setting KiwiSaver policy that election cycle and just relying on doing the minimum, make sure that works for you.

“Don't just blindly trust that 3% is the right thing for you, and don't wait for the government or something else to step in and tell you that it's not, because it's your retirement and a little bit of ownership here is what we're trying to encourage.”

With members seemingly interested in saving more, the next piece of the puzzle, says Macpherson, is finding out what business think.

“Employers contribute a lot to KiwiSaver, and if we assume how businesses feel about increasing those contributions, it might be better to just go and actually ask a whole lot of businesses as well and see how they feel, because I was really surprised at how many individuals were supportive of increasing their contributions.”

“Who knows? Maybe businesses are too, but we don't know that. We don't have that data.”