{"id":139106,"date":"2025-09-13T02:06:07","date_gmt":"2025-09-13T02:06:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/139106\/"},"modified":"2025-09-13T02:06:07","modified_gmt":"2025-09-13T02:06:07","slug":"retirement-no-longer-one-size-fits-all-interest-co-nz","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/139106\/","title":{"rendered":"Retirement no longer \u2018one-size-fits-all\u2019 | interest.co.nz"},"content":{"rendered":"

What used to be an almost \u201cone-size-fits-all\u201d picture of retirement<\/a> has broken down in New Zealand, an expert says.<\/p>\n

\u201cThe over-65 population is just getting more and more diverse, and the needs are just becoming more and more diverse,\u201d\u00a0the Retirement Commission\u2019s director of research and policy Patrick Nolan told the audience during a panel discussion on investment, KiwiSaver and retirement at the Financial Services Council Conference.\u00a0<\/p>\n

\u201cYou\u2019ve got real differences in need between if you\u2019re over 65 and you\u2019re working, you own your home – [it\u2019s a] very different position than if you\u2019re out of work and you\u2019re renting for example,”\u00a0Nolan said on Thursday.<\/p>\n

This reflected a common theme from two panels at the Auckland conference, which was held on Wednesday and Thursday: how to help people once they reach 65 take out money from the retirement income system.<\/p>\n

On the panel with Nolan was facilitator and Lifetime Retirement Income founder Ralph Stewart, Ian Perera from the New Zealand Society of Actuaries Retirement Income Interest Group, and NZ Super Fund<\/a> chief executive Jo Townsend.<\/p>\n

When asked what their thoughts were on asset management and allocation, and how to support a demographic that is older and growing older<\/a>, Townsend said these days, most people at the point of retirement are likely to live 20 to 30 years.<\/p>\n

This was a challenge when it came to risk appetite in retirement and having a more conservative mindset, she said.<\/p>\n

\u201cWhilst they still do need elements of growth in their portfolios, they might be very adverse to the volatility that can actually bring.\u201d<\/p>\n

The other thing about asset management and designing products for retirement, Townsend said, was that the decumulation phase<\/a> was very different to the accumulation phase.<\/p>\n

The decumulation phase is when you would be taking money out while the accumulation phase is when you’re building up the money in your fund.\u00a0<\/p>\n

During the accumulation phase, you could make a strong case for having a default product that represents a large group of people, she said.<\/p>\n

\u201cIt becomes a much more nuanced product requirement in decumulation than it is in accumulation.\u201d<\/p>\n

Townsend said she was surprised when she first came to New Zealand and learned KiwiSaver did not have in-built decumulation products.<\/p>\n

\u201cThis is a discussion that has been ongoing in Australia for quite a long time now and it\u2019s a really difficult problem to solve, but certainly they have been tackling it,\u201d Townsend said.<\/p>\n

\u201cA lot of that has been driven by regulatory change in order to get that happening but there are all sorts of potential things you can do from an asset management product perspective around things like trying to put floors in terms of volatility, or potentially trying to have a minimum level of income retirement.\u201d<\/p>\n

But this did cost money and could increase the complexity of trying to explain a product to somebody, she said.<\/p>\n

\u201cThere\u2019s sort of a trade off between not wanting to have that really high growth volatile outlook and still wanting to get some sort of growth over what might be a long time in retirement.\u201d<\/p>\n

Lack of knowledge<\/p>\n

When asked by Stewart what the biggest threats were to New Zealand superannuation, Perera said the country had made good progress in recent years with KiwiSaver.<\/p>\n

\u201cWe\u2019ve got half a million KiwiSavers who will get to age 65 over the next 10 years. There are nearly 200,000 who are already at that age and we have not given them enough help to work out what to do with their KiwiSaver balances when they get to age 65,\u201d Perera said.<\/p>\n

\u201cI think it\u2019s going to be an issue if we don\u2019t somehow give them the confidence to take advantage of the funds they\u2019ve accumulated \u2026 That lack of knowledge and focus on education I\u2019ve drawn out is a big issue for our entire system<\/a>.\u201d<\/p>\n

KiwiSaver<\/p>\n

A panel on KiwiSaver on Wednesday also discussed decumulation with RNZ money correspondent Susan Edmunds saying: \u201cWe give a lot of thought to putting money into KiwiSaver<\/a> but we don\u2019t help people a lot with bringing it out again.\u201d<\/p>\n

K\u014dura Wealth founder Rupert Carlyon said as providers, most of the focus goes into how to win customers.<\/p>\n

\u201cI mean KiwiSaver marketing spend for example, over the last three or four years has probably quadrupled where it was, which is an interesting stat around where our industry\u2019s going.\u201d<\/p>\n

\u201cWe\u2019re spending a lot of time focusing on getting them in the door. We\u2019re doing all right probably when they\u2019re in there but kind of nowhere near enough on education,\u201d he said.<\/p>\n

\u201cI think the conversations that we as providers are having with our customers up front, it needs to change – even down to some of the life stage products that we see in the market.<\/p>\n

\u201cMaking sure that we don\u2019t stop anything at 65. Up front, all of the communications from our PDSs [Product Disclosure Statements] to when we join them need to be talked about. We\u2019re setting you up through to 95, not through to 65.”<\/p>\n

“We don’t have the annuity products yet here in New Zealand. I think until we see tax changes that’s not going to happen because people don’t want to get double taxed on the annuity out of those income products.<\/p>\n

\u201cI\u2019ll be honest, with the KiwiSaver providers that we have at the moment, it\u2019s going to be really hard to see the annuity. The only real path we\u2019ve got is education and that needs to start up front,” Carlyon said.<\/p>\n

Maximised for the future<\/p>\n

Townsend said people don\u2019t really worry about retirement until it\u2019s almost upon them.<\/p>\n

By then, it could potentially be too late to benefit from the ability to make small additional contributions over a long term, Townsend said, and there was no real incentive for people early on to contribute more.<\/p>\n

\u201cI think the basic constructs are there. It\u2019s about how they can potentially be maximised for the future.\u201d<\/p>\n

\u2018We\u2019ve got a lot on our side\u2019<\/p>\n

Nolan brought up the anti-government protests in France<\/a>.\u00a0<\/p>\n

\u201cIf you look at what was behind that, it was basically, they lost control of their pension system<\/a>. And they\u2019re having trouble with their funding, their spending and they\u2019ve got very high levels of public and private debt.\u201d<\/p>\n

\u201cIt\u2019s a catastrophic situation you can end up in as a country. Now, we\u2019re a long way from that in New Zealand.<\/p>\n

“We\u2019re very fortunate. Our system is much more coherent. It\u2019s much more cost effective. We\u2019ve got better demographics so we\u2019ve got a lot on our side,\u201d Nolan said.<\/p>\n

\u201cThe concern is if we don\u2019t get to grips with some of these issues now, in 10 years we\u2019ll be where France is now.\u201d<\/p>\n

When asked about innovation and what could potentially be done to help solve some of the problems, Nolan said: \u201cIf you pull one part of the system, it\u2019s going to create pressure elsewhere.\u201d<\/p>\n

\u201cSo if I had a magic wand and I could achieve one thing, it would actually be more about governance,\u201d he said.<\/p>\n

If the country had a political accord, this would sort out the relationships between different agencies and help sort out a clearer work plan, Nolan said.<\/p>\n

But there were some immediate fixes that could be done, he said, such as trying to close some of the gaps, for example, the KiwiSaver gender gap<\/a>.<\/p>\n

\u201cThere might be things you could do around innovation and how we\u2019re servicing the self-employed.\u201d<\/p>\n

In the political spotlight<\/p>\n

Nolan said while New Zealand did not have a million people over 65 – it was coming soon and would be a big milestone.<\/p>\n

\u201cIt\u2019s going to have big implications and I just think we haven\u2019t really grasped the need to think about when people are moving into that drawdown phase. The advice we\u2019re going to be providing, it\u2019s just going to be fundamentally important.\u201d<\/p>\n

This comes as a Financial Markets Authority report<\/a> found that this year, KiwiSaver withdrawals by people 65 and over has decreased, with members choosing to draw down their funds gradually rather than take it out as a lump sum.<\/p>\n

At the same conference, Finance Minister Nicola Willis said National would be going into next year\u2019s election with a superannuation and savings policy<\/a> that it believes addresses some challenges New Zealanders face.<\/p>\n

As for Labour, KiwiSaver is unfinished business<\/a>, its finance spokesperson Barbara Edmonds said.<\/p>\n

While Labour wouldn\u2019t be looking to lift the superannuation age, she said there were other settings that could be looked at.<\/p>\n

Meanwhile New Zealand First leader Winston Peters announced a proposal to increase both employee and employer contributions to initially 8% and then later to 10%. KiwiSavers and employers would receive tax cuts to cover the increases, Peters said.<\/p>\n","protected":false},"excerpt":{"rendered":"What used to be an almost \u201cone-size-fits-all\u201d picture of retirement has broken down in New Zealand, an expert…\n","protected":false},"author":2,"featured_media":139107,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185],"class_list":{"0":"post-139106","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/139106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=139106"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/139106\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/139107"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=139106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=139106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=139106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}