"March saw a sharp lift in KiwiSaver sign-ups, with net total membership rising 1.8% for the month and closing on 1.7 million members," said Tower Investments CEO Sam Stubbs.
He said opt-ins via employer were up 1% and automatic enrolments were up 2%, suggesting better employment conditions.
He also cited potential post-Budget changes to KiwiSaver as a driver for the increased membership.
"Another factor could be workers getting in on KiwiSaver before changes are made to the scheme as flagged by the Government for possible announcement in the upcoming Budget," Stubbs said.
"People hesitating to join may have decided they should get in now just in case KiwiSaver is less generous to those who sign up later on."
Stubbs said with the Government having flagging the May 19 Budget as being about savings and investments, changes to KiwiSaver incentives were possible.
"It's possible - I don't know if you'd call it probable - it's certainly possible that they'll be cutting benefits to some degree because those subsidies are quite expensive," he said.
"Certainly it would seem that if the Government is calling this a savings and investments Budget then they clearly want the industry to grow and KiwiSaver to get even stronger and more viable. Maybe for that long term gain we might have to endure some short term pain in terms of the removal of subsidies or some subsidies."
Stubbs said that as KiwiSaver membership had grown to include the majority of working New Zealanders, it was more important to focus on contributions rather than initial incentives.
"I think now the mechanisms for enrolling are so well entrenched that people are going to get signed up anyway, so I think the Government will - I hope - be more focused on the long term growth of the contributions in the scheme and making the existing members wealthier than focus solely on signing up new members."
Stubbs said work could be done around tax credits - which he said are less understood by investors - and cautioned against the creation of a single default fund.
"The only thing we'd be hugely disappointed in is if they adopted the Savings Working Group's idea of having a single low cost index fund, that would end up robbing a lot of New Zealanders of decent investment returns over the long term," he said.
He said the current default providers had provided stable returns throughout the global financial crisis, and "I'd be surprised if the Government could run a single scheme at a lower cost that the private industry has been managing."
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