Budget changes hit KiwiSaver’s appeal

Term deposits and rental property remain the investment of choice for the majority of Kiwi's, while Budget changes have dented KiwiSaver's popularity, according to the latest ASB Investor Confidence Survey.

Tuesday, August 16th 2011, 10:02AM

kiwiSaver fell from 12% to 9% as the investment offering the best return, ranked behind term deposits, rental property and bank savings.

"The changes to KiwiSaver announced in Budget 2011 appear to have shifted investor perceptions of KiwiSaver," said ASB head of private banking and wealth management, Jonathan Beale.

"The swing in attitude can also be seen in the 6% drop in the number of people that think KiwiSaver will encourage New Zealanders to save for their retirement, from 75% to 69%."

However, the survey also found out of those using or intending to use KiwiSaver, a record 63% said it would be their main source of retirement provision, a percentage which has been slowly rising over the past year.

"For this reason we see the drop in KiwiSaver popularity as a downward blip in the short term."

Beale said it remained to be seen whether this 'blip' developed into a longer term trend, "but our feeling is that the success of KiwiSaver will see it pick up in popularity again in future."

The survey found an even split between investors expecting better or worse investment returns.

A total of 21% of investors felt term deposits offered the best value of all investment types, up two points from last quarter. Rental property climbed one point to 16%, followed by bank savings, steady at 12%.

Beale said the results indicated investors are incorporating their desire for security into their assessment of best returns, "and are still turning to term deposits and rental properties over other investments."

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