tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, August 15th, 5:17PM

Investments

rss
Latest Headlines

Young people should budget to live to 100, actuaries say

New Zealanders are getting information about how to build wealth, but not how to spend it, a group of actuaries says.

Tuesday, December 3rd 2019, 8:53PM

The Retirement Income Interest Group of the New Zealand Society of Actuaries made a submission to the 2019 Review of Retirement Income Policies.

They pointed out that longevity was increasing but New Zealanders were being given insufficient information about how to make their money last.

"Guidance for New Zealanders is better for accumulation than for the decumulation phase."

They said it would be sensible for younger people, especially women, to plan for a retirement that lasted until they were 100.

The group said people should be given KiwiSaver statement wording and underlying projection models that were updated regularly to reflect the latest longevity data, encouraged to consider their decumulation options through to age 90, 95 or 100, and regulations should be introduced for KiwiSaver projections to explain different drawdown strategies and their consequences.

From next year, KiwiSaver providers will have to give annual statements including projections of what their income might look like in retirement. 

"Compared with the accumulation phase (where it is usually agreed that any saving is better than none), decumulation is harder to generalise and there are more risks involved," the group said.

"People have limited resources in later life, especially once they have finished working, so it is hard to recover from a mistake or bad luck.

"Longevity risk can be dealt with by buying an annuity product, but the New Zealand market is currently limited to one product which will not be right for everyone."

Alison O'Connell, lead author of the report that accompanied the submission, said it was unlikely that providing for retirement could be left in the hands of private savings – even for the youngest New Zealanders.

She said New Zealand Superannuation was the best protection against longevity risk.

"It is quite possible that, despite the introduction of KiwiSaver, younger cohorts will need NZS just as much, if not more, than older cohorts, because of lower home ownership, lower wage growth, less stable jobs and lower savings rates.”

She said it would be a policy choice to keep the pension age at 65 – and it was not unaffordable for the country.

The group suggested, if there were to be a change, the age was lifted to a level where future generations could expect to have the same number of years on the pension as earlier generations.

“Even with an eligibility age of 68 years, today's 25-year-olds would be expected to receive NZS for longer than the cohort aged 85 who had an eligibility age of 60 years.”

Tags: annuities decumulation KiwiSaver NZ Super

« Transfer times and why they matterKōura: People see advice and KiwiSaver as distinct »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • a2: could the milk be starting to turn?
    “Great Fundemental look.I guess in the ASX50 . as long as Aussies still love buying the Dip..its no worries Graeme Adams...”
    1 day ago by Graeme33
  • It starts with governance
    “Hi David and thanks for your words also. I did read the FMA stuff before the post and also in my first response mention...”
    2 days ago by gavin austin adviser business compliance
  • AMP reports profit drop amid 'solid' result
    “Sadly, AMP is becoming less and less relevant. Apart from this tiny blip of positive cash inflow, they've been bleeding clients...”
    2 days ago by Contrarian
  • It starts with governance
    “Good words Gavin - might also mention the FMA publication - https://www.fma.govt.nz/compliance/guidance-library/corporate-governance-in-new-zealand-principles-and-guidelines/...”
    2 days ago by dcwhyte
  • It starts with governance
    “adviser1 - go talk to Partners Life. they have a great tool to help with this sort of stuff. ...”
    2 days ago by Tash
Subscribe Now

News and information about KiwiSaver

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 ▼3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 ▼3.55 ▼3.49 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 14 August 2020 1:06pm

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com