By Allan Hogg
Over the coming weeks New Zealand’s one million-plus KiwiSavers will be receiving their annual reports from providers. For some KiwiSavers, these reports will herald some surprising results – potentially negative results. In short, your KiwiSaver fund may not be looking as healthy as you would like.
Why you ask? What’s happened to my savings? Three words – the economic recession. Quite simply, the world has changed. After years of enjoying the high life – economically speaking – with booming share prices, a high New Zealand dollar and buoyant property prices, the laws of gravity took over. What went up has come down. This has led to a global credit crunch and the recession we currently find ourselves in.
How does this affect KiwiSavers?
KiwiSaver investment schemes have a long-term focus (you’re in it until you reach retirement age). Long-term investments tend to fluctuate over time depending on economic forces, particularly the share market. When the economy is buoyant, you see higher returns on your investment; when it’s down, you see lower returns.
We are currently experiencing a volatile share market and this has adversely impacted upon almost all of New Zealanders’ KiwiSaver funds. It will take time before economies return to normal levels of growth.
What should you do?
For a start, don’t panic! Providers can’t promise a bounce back to normal growth rates in a few months, but, over time, these should return to normal levels of growth and you’ll start to see a better rate of return to your investments.
For now, take the time to look at your investment and your portfolio. Is this fund best suited to your personal investment style? Is it balanced? Is it weighted toward shares or is it weighted towards cash? Your provider will be able to give you information on the different portfolios available and it is very easy to change. At AXA we offer our KiwiSavers two free portfolio changes a year, giving absolute control over where your savings are placed.
If you haven’t already, join KiwiSaver now
You might not think an economic recession is the best time to invest but KiwiSaver offers some valuable benefits (including the $1000 kick-start and $1042 matching tax benefit – how can you turn down free money from the Government?). Plus now that the minimum contribution level has been lowered to 2%, it’s now more affordable than ever to enter KiwiSaver.
There are dozens of KiwiSaver providers to choose from and ultimately it is up to you as to who you go with but please, do your homework first. Look at the organisation’s performance history, what services it offers, what business it is in (is it solely a KiwiSaver provider or does it manage other investments and financial matters? Note the latter is preferable). Above all, is it a trusted brand? You may wish to switch to one of the Government’s default providers – these are organisations with a solid corporate foundation and a proven track record within the investment and superannuation sectors.
To find out more about AXA’s KiwiSaver offerings check out www.axa.co.nz or give AXA a
call on 0800 29 27 28.
Allan Hogg is Head of Corporate & Alliances Distribution at AXA New Zealand, a division that includes KiwiSaver services for individuals and businesses.
Retirement Commission's Sorted KiwiSaver links