Minister surprised by lack of draw-down products

With KiwiSaver recently hitting the five-year anniversary, the first wave of members 65 and older are becoming eligible to withdraw their funds.

Speaking at the Workplace Savings NZ conference =, Foss said despite this there didn't seem to be much in the market around managing the decumulation phase for those who have reached 65.

"It's very interesting that there doesn't seem to be a huge amount of product in that area," he said. "I hope people don't draw down the money and go on a world cruise because that's not the intent of it."

However, he said it wasn't necessarily a problem that nothing much had emerged yet in this area, particularly given the "competitive" nature of New Zealand's fund management sector.

"I portray it as a surprise that the market hasn't put anything in that; some would argue the market is succeeding and some would argue it is failing. It is a very competitive market but we're yet to see anything in that space."

Asked about what role annuities might play he said there had been "issues" around annuities but the government was not working on anything specific to do with them at the moment.

He said there could be other products developed to perform the same role: "There could be all sorts of things which fill the same space as an annuity."

Foss also said the giant Financial Markets Conduct Bill, which he described as the last of the "biggies" in terms of financial legislation, would probably be passed early next year.

He said the bill, which is 560 pages long, could be passed before Christmas "at a real push" but this was unlikely.

Comments from our readers

On 21 August 2012 at 8:45 am David van Schaardenburg said:

Lack of decumulation 'products' being sold to KiwiSaver retirees most likely reflects that the financial services industry perceives a lack of economic opportunity at this time with only a limited number of 'KiwiSaver retirees' finishing up with modest KS balances. Pretty obvious to all but those upon high.
While we know this will change, what would be more useful and costless for this client type in the future is for them to know how much they can sustainably draw down each month from their KS account and to set up a regular withdrawal facility. That assumes their KS investments are allocated increasingly towards income assets as they age.

Minister surprised by lack of draw-down products

Commerce Minister Craig Foss is surprised by the lack of products aimed at helping KiwiSavers manage their funds once they turn 65, but he says the government isn't planning to intervene at this stage.

Monday, August 20th 2012, 6:34AM 1 Comment

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