The Investor 1 April 2008

Sure, I’ve criticised the government for introducing KiwiSaver too fast, which has led to various problems. And I’ve worried, in writing, that it’s not good policy, given how much taxpayer money is going into it.

I’ve also recommended that people should put only as much into KiwiSaver as necessary to get all the incentives from the government and employers, and do further saving elsewhere, where money isn’t tied up. I doubt if Michael Cullen loves me for that.

Beyond that, though, I have written many recent columns explaining the strengths of KiwiSaver. Why?

• It’s such a good deal. Many of my columns over the years have pointed out that share funds, and managed funds that include shares, are an under-rated long-term investment in New Zealand — while acknowledging that the fees are often too high.

  But once you add the government’s kick-start and so-called tax credits, returns for those who go into KiwiSaver wisely are likely to be pretty much unbeatable. And that’s even before adding the employer contributions that many people will receive starting this week.

• KiwiSaver is funded by the taxpayer. Surveys show better off people are more likely to have joined. I want to show those on lower incomes how they, too, can take part.
• There’s never before been a topic of interest to such a wide audience. Practically every New Zealander who starts a new job is automatically enrolled in KiwiSaver. And everyone else under 65 can benefit from it. Even many of the 65-pluses are keen to help their children or grandchildren to join.
• Confirming the widespread interest, I have received many times more emails and letters from readers asking about KiwiSaver than any other topic in my career. It’s a complex scheme, and readers’ messages often reveal misunderstandings that need to be addressed.
• Through KiwiSaver, New Zealanders are learning the basics of investing. Some examples: the relationship between risk and return; how to assess each person’s appropriate level of risk; the advantages of regular drip-feeding into an investment; the importance of diversification; the advantages of including offshore assets; and the power of reinvesting returns.

Over the years, I’ve written many columns on all of these topics, but suddenly more New Zealanders are taking an interest — and acquiring knowledge that they will apply to their other saving and investing.

Speaking of which, when I write on other topics, KiwiSaver often creeps in. If it’s getting into the housing market, it would be silly not to mention KiwiSaver help for first home buyers. If it’s how to handle a mortgage, I should mention KiwiSaver mortgage diversion. If it’s the new PIE (portfolio investment entity) tax system for managed funds, I feel I need to say that almost all KiwiSaver funds are PIEs, and in most cases will do better than non-KiwiSaver PIEs.

It’s not that I love the government. Far from it. But helping ordinary New Zealanders is what matters. If that sometimes seems to put the government in a good light, so be it.

I will continue to write on a range of other topics too. But if I’m going to follow the interests and concerns of readers, KiwiSaver will remain a frequent topic in this column until it’s clear that people more fully understand how they can get the best out of it.

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.