KiwiSaver enters ‘hard yards’ phase
Total KiwiSaver membership recorded by IRD grew by more than 23,000 in November, though membership trends suggest KiwiSaver has entered the ‘hard yards' for growth.
Thursday, December 9th 2010, 7:22AM
"Membership trends indicate that KiwiSaver has probably entered into the long expected ‘hard yards' phase for future growth," said Tower Investments CEO Sam Stubbs.
He said that with the KiwiSaver sector "more of a marathon than a sprint" the ‘hard yards' phase would see providers have to do more to attract savers who looked to "recycle" and change provider.
Stubbs also believes the landscape will change for providers as savers' begin to engage more as balances increase.
He said anecdotal evidence suggests that people become more engaged when savings have grown to the $20,000/$30,000 mark.
"Then it becomes about your advice channel."
"The gathering trend to slow incremental membership growth should put mounting commercial pressure on KiwiSaver providers who lack economies of scale to stay in the game."
"It is no longer sufficient to hand out one's shingle as a KiwiSaver provider and wait for eager new members to come flocking," he said.
"The overall slowing down of KiwiSaver membership growth extended its trend, however."
Despite the slowing growth, with net total membership monthly growth settling at around 1.5%, Stubbs said at the current growth rate KiwiSaver is on course to end 2010 with more than 1.6 million New Zealanders signed up.
"Opt-in via provider (active choice) membership continues to have the highest monthly growth rate of 1.7%, followed closely by automatic (default) enrolment at 1.5%," he said.
During November 12,884 Kiwis opted into KiwiSaver via provider, 8,685 were automatically enrolled and 1,817 (0.8% monthly growth) opted in via an employer.
| « Grosvenor announces QFE plans | KiwiSaver mismatch a 'huge challenge' for advisers » |
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