More than a third of New Zealanders say they’re watching their KiwiSaver balance more closely as a result of COVID-19, while one in five say the pandemic has improved their understanding of how KiwiSaver works, according to new research by Westpac NZ.
A representative survey of 1,000 New Zealanders who belong to a KiwiSaver scheme also found 18% of people have made changes to their account because of COVID-19. Of those people, 36% moved into a more defensive fund and 36% either suspended or reduced their regular payments.
However, fewer than half of people with KiwiSaver say they’ve checked their risk profile in the past year. This is usually done via an online process that helps people decide which investment fund is right for them.
Westpac NZ Customer Experience Hub General Manager Karen Silk says while she’s encouraged to see Kiwis more engaged with their investment strategy, it’s important they carefully consider their investment decisions and focus on long-term investment goals rather than short term volatility.
“Although we’re clearly living through an unprecedented event, market volatility is normal and should be expected to occur. It’s good to keep an eye on your balance, but don’t make hasty decisions based on fluctuations – we encourage Kiwis to choose the right fund for their life stage and tolerance of investment risk, and then stick with it,” Ms Silk says.
“One in three people with KiwiSaver rate COVID-19 as having a moderate to major impact on their retirement savings. But history tells us that usually, over the long run, the value of their investments will rise.
“We want investors to be clear on what they’re saving for, their timeframe and their risk appetite. For example, are they saving for retirement or a first home deposit, and how close are they to needing that money? And do they want to play it safe or are they prepared to see their balance jump around a bit, but with the possibility of a higher return over time? If you need help with these questions, come and talk to us.”
The survey also found that among the people who have made changes to their KiwiSaver as a result of COVID-19, 72% believe they made the right decision, while another 16% say it’s too soon to tell.
Are you checking your KiwiSaver balance more closely as a result of COVID-19?
No – I’m checking it less
No – about the same 36%
Have you made changes to your KiwiSaver account because of COVID-19?
Yes, moved into a more defensive fund
Yes, moved into a more aggressive fund
Yes, increased contribution rate
Yes, decreased contribution rate
Yes, taken a contributions holiday
Yes, withdrawn funds from KiwiSaver
Yes, changed KiwiSaver provider
No, I haven’t made any changes due to COVID-19
Has COVID-19 changed your understanding of how KiwiSaver works?
Yes, I have a better understanding
Yes, I have a worse understanding
No, About the same
How would you rate COVID-19’s impact on your retirement savings?
Too soon to tell
When did you last check your risk profile?
Within the last month
1-6 months ago
6-12 months ago
1-5 years ago
More than 5 years ago
Not since I opened it