Research shows that KiwiSaver fees are low… so what should Kiwis consider when it comes to KiwiSaver?


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There’s often a lot of chatter around KiwiSaver fees, but new research shows that KiwiSaver fees in New Zealand are lower than fees on similar funds in other countries.

What’s more, a comparison of KiwiSaver fees will only tell part of the story when looking at providers. There are other important considerations that we recommend Kiwis factor in to their thought-making process when it comes to their KiwiSaver account.

KiwiSaver Fees lower than Australia and UK

Research by Deloitte Consulting Australia compared KiwiSaver fees to similar funds in Australia and the United Kingdom.

They found that KiwiSaver fees are on average lower than fees charged on similar funds in Australia and KiwiSaver default fees are on average lower than the fees for default products in both Australia and the UK.

“It’s good news for KiwiSaver members that the fees they pay have been found to be globally competitive,” Generate chief executive Henry Tongue said.

He says KiwiSaver members can have confidence that the fees charged by managers are reasonable by international standards. “The fact our fees are lower than Australia is quite phenomenal.”

The report compared fees on default funds in each country and also fees on non-default funds which Deloitte called “choice”.

Download the full report here

Why fees aren’t the only consideration

As Warren buffet says, ‘Price is what you pay, value is what you get.’ While fees are a consideration, we believe there are more important factors when it comes to choosing a KiwiSaver provider and managing your KiwiSaver account.

“A single-minded focus on fees, especially when these are already highly competitive when compared to other markets, crowds-out the critical need to also focus members attention on fund selection and contribution levels. We should be encouraging members to seek advice, think about fund choice and contribution rates, and encouraging more financial advisers to provide advice on KiwiSaver.

“More quality advice is the key outcome for customers, now.”

Worth considering = the value of advice

Research shows that financial advice can add long-term value to your savings.

That’s part of the reason we like to talk directly to our members coming on board, to help them understand their KiwiSaver options and make sure their account is set up for their goals.

Not knowing how to best set up your KiwiSaver account for your situation, could cost you at retirement.

Other research by the Financial Services Council shows the majority of respondents contribute only 3%-4% into their KiwiSaver, while 74% thought that Kiwis should be contributing a bigger percentage of their earnings.

Understanding the difference that your contribution rate and fund choice can have on your KiwiSaver savings, and how these factors should change throughout your lifetime is very valuable information. Talking to a KiwiSaver adviser and having them review your KiwiSaver account and strategy throughout your lifetime, could add up to hundreds of thousands of dollars at retirement.

And given that for many Kiwis their KiwiSaver account is one of their biggest and most important assets, it’s makes sense to seek smart advice.

Worth considering = net returns after fees

And while past performance isn’t necessarily a reliable indicator of future performance, if looking at a fund past results, we recommend reviewing the net returns after fees.

This shows how much investors actually earn on their investment, regardless of the fees. This allows you to compare apples with apples; take-home returns, with take-home returns.

Worth considering = responsible investment

For a growing number of Kiwis, where their KiwiSaver savings are invested is an important consideration. Not all KiwiSaver fund options are the same, especially when it comes to their ethical credentials.

Look for a provider’s Responsible Investment policy or independent accreditations like the Mindful Money badge to see where your funds are invested.

Got questions about your KiwiSaver account?

To talk with a Generate adviser contact us on 0800 855 322, or send us an email.