Research by associate professor Aaron Gilbert and Ayesha Scott at AUT Business School Department of Finance has shown, on average, KiwiSaver PDS documents delivered under the new Financial Markets Conduct Act framework are significantly shorter and contain simpler language when compared with the prospectuses and investment statements they replaced.
But even the simplified product disclosure statements require a high level of literacy. People would need to know and understand about 100 finance-related terms.
"On average, simplified disclosure has made these documents easier to understand for our average New Zealander who is thinking about or invested in KiwiSaver," Scott said.
Gilbert said, given the uncertainty around the future of national superannuation, KiwiSaver would become a major component of people's financial future.
"Because it is so important and because small decisions made today can have a huge impact 30 or 40 years from now in terms of how much money people have to retire on, it's really important people are making good decisions when it comes to their KiwiSaver.
"The first step in making those good decisions is to get people actively seeking information."
Gilbert and Scott compared the last prospectus produced by 21 KiwiSaver providers with their new simplified disclosure documents to provide a before and after snapshot of the effect of the regulation.
A number of measures were used to evaluate the readability of the documents including the complexity of the language used compared to common, everyday plain English words and the number of specialist financial terms included.
The researchers will now ask people to read the documents to work out whether they could get the information they needed from them.
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