“So of the $143 billion funds under management in KiwiSaver, it’s a very small proportion.
“It probably reflects the statistics around net migration.”
The figures come as exclusive data released to the Herald by the FSC show nearly $2 billion in member contributions in the first quarter of this year.
That’s the second-highest quarter on record – and doesn’t include the 3.5% contribution increase introduced by the Government in April.
“I think we’ll see even more of a shift in the second quarter for this year in terms of more people contributing,” Hope said.
But while there’s been a slight increase (0.31%) in members in the last 12 months, partial or full withdrawals continue to soar.
Over the past year, there’s been a 64% increase in people taking money out of the scheme.
In some categories, partial withdrawals have also skyrocketed.
Partial withdrawals for illness are up 63%.
Hope said some people were likely turning to KiwiSaver because they were facing long waitlists or needed elective surgery quickly.
“We would encourage the Government to take a look at that insurance space, make sure people can access some of those procedures much more quickly, by changing some of the policy settings in relation to health and life insurance,” Hope said.
First-home buyer partial withdrawals are also up 26%.
And as the cost of living crisis continues to bite, those taking out their savings for hardship reasons has continued to rise, but at a slower rate.
“Obviously we’re in a cost-of-living crisis. People are facing a number of financial challenges. That’s still only a very small proportion, and the overall funds under management in KiwiSaver continue to increase.
“What that tells you is there’s not more people pulling their money out than are contributing, which is really important.”
Financial Services Council (FSC) chief executive Kirk Hope believes the right checks and balances are in place to ensure people are taking KiwiSaver money out for the right reasons.
Photo / Getty
Hope thought the right checks and balances were in place to ensure people are taking money out for the right reasons.
“You’ve got to apply to your provider. That provider has to go through a supervisor, so it’s ultimately up to a supervisor to make a decision.”
The figures come as the politics of KiwiSaver and superannuation are heating up in election year.
New Zealand First leader Winston Peters has announced he will campaign on making KiwiSaver enrolment compulsory at birth with a $1000 Crown contribution.
“I think the important thing is that all political parties are starting to talk about it and they need to talk about it as a system, and we’d encourage them to do so.
“People are realising the importance – not just for their own personal outcomes in the future, but for the country as well, because it gives us a lot more choices.”
He said a compulsion was a “great way” to ensure young people have a pool of savings, but wouldn’t commit to supporting New Zealand First’s policy.
“If you think about how many people are actually in KiwiSaver as a proportion of the working population, the auto-enrolment process that we have now is actually doing a pretty good job.”
Hope said the FSC was working on an election-year manifesto to take to all parties.
“One of the things that we’ve been suggesting to all political parties is you’ve got to treat retirement income and financial resilience as a system.
“You’ve got to think about not just KiwiSaver, you’ve got to think about people’s life and health insurance as well.
“I think there’s still work to do in that space because what you’re seeing is the policies are slightly piecemeal.”
The Retirement Commission said that as KiwiSaver approached its third decade, the data gave “reason to be pleased about its growing role in assisting New Zealanders’ retirement incomes, while highlighting the current economic environment and continued challenges within the system”.
Katie Bradford is a senior correspondent at the Herald. She has been a broadcast journalist for over 20 years and was based in the press gallery for 10 years. She specialises in politics, business and Auckland issues.