KiwiSaver membership is now well over two million but the
number of people signing up each month is clearly trending
down, latest figures show.
IRD's official monthly statistics state 2,039,362 people were
enrolled in the retirement savings scheme as of November 30.
That means just over 13,000 people signed up last month,
compared to 18,935 in November 2011 and 24,185 in November
Analysis of the statistics showed a continued drop in new
KiwiSaver membership growth, said Sam Stubbs, head of Tower
"Compared with October, when just over 11,000 people joined
KiwiSaver, in November it was just over 13,000.
"These new monthly membership growth numbers, averaging
12,000, fall short of the average 15,000 per month recorded
for the first ten months of 2012."
IRD's most recent KiwiSaver Annual Report showed membership
grew on average by 25,000 individuals a month last year.
Stubbs said it was natural that membership growth was slowing
down as KiwiSaver was now reaching a point of maturity.
"There are just fewer people who are becoming eligible to
join, it's as simple as that. I would call it a sign of
Personal finance writer Mary Holm agreed that the slowdown in
membership growth was to be expected because there were only
so many people who wanted to belong to the scheme.
"All the keen ones are already on board," she said.
But she said there were people who could join but chose not
According to IRD, about 67 per cent of eligible people aged
18 to 24 years and 29 per cent of eligible children were
enrolled as of June 30.
"A lot of people say they can't afford to and in some cases I
challenge that but there are clearly some families who just
really struggle and feel they can't afford it," Holm said.
Most other reasons people gave for not joining "don't hold
up" when challenged.
One of the key features of KiwiSaver is auto-enrolment of
employees, meaning a person entering the workforce for the
first time, or starting with a new employer, is automatically
enrolled into KiwiSaver.
There are six 'default' providers for those employees who do
not actively select a KiwiSaver provider.
Tower, one of six KiwiSaver default providers, believed the
current automatic KiwiSaver enrolment system had been a great
success early on.
But Stubbs said it could be time to consider "fine tuning"
the design of default funds.
With the default providers' terms of appointment due to
expire on June 30, 2014, the Ministry of Business, Innovation
& Employment (MBIE) is looking at whether the current
default arrangements are still suitable.
Last month it released a discussion document called 'Review
of KiwiSaver Default Provider Arrangements'.
Stubbs said he was keen to see changes made and that Tower
"welcomes public discussion on how to improve the KiwiSaver
He wanted to see new members automatically placed in a
default fund, not just a default provider, that best suited
the risk profile of their age.
Younger new members "who should usually be taking more
investment risk" would be placed in growth rather than
conservative funds, he said.
"As they grew older, these members would be migrated
automatically at intervals into the next life cycle fund most
appropriate to their changing risk profiles."
Opt-out options would be needed for such people as those who
were saving up through KiwiSaver for a home purchase deposit.
The MBIE's discussion document is open for submissions until
- By Herald Online