The FMA’s latest KiwiSaver Annual Report for the year to 31 March 2024 shows that KiwiSaver investments are working well for New Zealanders, passing the significant milestone of its first $100 billion of funds under management. Ending the financial year on $111.8 billion, there was a 19.3% increase from last years $93.6 billion funds under management.
John Horner, FMA Director Markets, Investors and Reporting, said, “Breaking through the $100 billion mark is something to celebrate; for a relatively small country like New Zealand, it represents a coming of age of KiwiSaver.”
This year’s growth was due to a combination of strong investment returns of $13.1 billion, and the inflow of $11.2 billion into KiwiSaver through contributions of members, their employers and the Crown.
“For many New Zealanders, KiwiSaver may be their first or only investment and a large part of their retirement savings and ultimate financial security. KiwiSaver is designed with the purpose of improving individuals’ well-being and financial independence, particularly in retirement, and it was pleasing to see individual contributions through salaries and wages were up to an all-time peak of $5.9 billion this year.
Total fees, charged by KiwiSaver providers have increased, 18.9% – from $664.1 million in 2023 to $789.6 million in 2024. This is in line with the increase in total funds under management and shows that fees have not increased per dollar invested, but they have not decreased either.
“While we have seen a gradual decrease in fees as a percentage of funds under management over the last 10 years, this wasn’t continued in the 2024 data. As KiwiSaver grows, I expect to see the benefits that come with economies of scale shared with KiwiSaver members.”
Over the last four years the overall investment profile of KiwiSaver has skewed toward growth, driven by more investors making active choices that are in line with their long-term retirement goals.
There are now 3.3 million people invested in KiwiSaver, representing approximately 62% of the total population. Of those, almost three million have selected their own provider and fund. The rest are default allocated scheme members, who have been automatically enrolled into one of the six default funds.
“Growth funds now represent 46% of total funds under management, with $51.4 billion invested, and a total of 1.53 million investors selecting a growth fund,” says Mr. Horner. “This has grown rapidly over recent years, more than doubling from $24.5 billion in 2021.
“Contrasting this year’s report to previous years, we can see how investor behaviour has changed over time, together with the profile of the funds being selected. The FMA has said for some time that younger investors, saving for retirement, should consider funds with more growth assets, as these are more suited to a longer investment horizon. With KiwiSaver in its 17th year, investors have become more comfortable with the long-term nature of KiwiSaver. We believe this is why almost half of all KiwiSavers have moved towards more growth-oriented funds.”
“We are proud to report on KiwiSaver data annually. Promoting a fair, efficient and transparent KiwiSaver market is a priority for the FMA. This starts with us ensuring that all providers are focused on the best interests of their members,” concludes Horner.
