ANZ New Zealand, the country’s largest KiwiSaver provider and bank, wants the Government to start making contributions to young KiwiSaver members so they can get a better head start on their savings.
ANZ has put the call out for the Government to consider introducing a matching contribution for KiwiSaver members aged under 18.
Currently, the Government only contributes to a person’s KiwiSaver if they are over the age of 18 – even though anyone under the age of 18 can be enrolled into KiwiSaver.
The Government contributes 50 cents for every dollar a person contributes to their KiwiSaver, up to a maximum government contribution of $521.43 each year.
ANZ’s KiwiSaver scheme, ANZ Investments, has just under 650,000 KiwiSaver members, with almost 50,000 of those being members under the age of 18.
ANZ Investments’ Managing Director Fiona Mackenzie said getting started early and allowing more time for savings to compound can make a “big difference” when it comes to KiwiSaver.
“When you’re a retail investor, one of your biggest competitive advantages versus everybody else who’s an investor, including institutional investors who have very sophisticated teams, is time,” she told interest.co.nz on Wednesday.
“Time is absolutely our biggest advantage in this space.”
ANZ Investments’ data shows 20% of its under-18 cohort have contributed to their KiwiSavers over the past two months, made up of almost 8% of employee contributions and just over 12% voluntary contributions.
Mackenzie said it was an encouraging number considering members in this age group weren’t getting a Government contribution – and employers also aren’t obligated to pay an employer contribution for KiwiSaver members under the age of 18 either.
In the 12 months to September 2024, 21.1% of ANZ Investments’ members who were under the age of 18 made an employee or voluntary contribution.
Most of ANZ Investments’ younger members are in a growth-oriented fund, and around 83% of members aged 13-17 are in the scheme’s growth fund.
For members under the age of 13, just over 85% are in the ANZ Investments’ Growth Fund.
“We’d encourage our younger members – and their parents – to check which fund they are invested in,” Mackenzie said.
'Increasingly important'
According to ANZ, a five-year old who joins a KiwiSaver scheme today could be on track to save more than $100,000 by their mid-thirties.
This is based on if that five-year-old contributed $5 a week to an aggressive or high growth fund until they were 18 and saved $5,000 in today’s money.
If that person then started work on the adult minimum wage and remained in an aggressive KiwiSaver fund, that $5,000 sum could grow to just over $105,000 by the age of 34 – the average age of an ANZ Investments’ member making a first home withdrawal.
“Our research shows us younger generations view KiwiSaver as their way to buy their first home. But they also view it as their main way of saving for a comfortable retirement, whereas older generations also place a lot of importance on NZ Super,” Mackenzie said.
She said KiwiSaver would play an “increasingly important role” in the country’s future wealth as the population aged.
Even though KiwiSaver is still quite young – currently in its 17th year – Mackenzie said the scheme had the potential to be an area of “haves and have nots” for people.
Mackenzie, who has 16-year-old twins, enrolled them in KiwiSaver when they were four-years-old.
Children whose parents had the foresight to get them into KiwiSaver from a young age would have a distinct advantage down the track from both a first home buying and retirement perspective, she said.
“Markets do all the heavy lifting. So I think this is an important conversation to have as early as possible.”
The latest KiwiSaver statistics from Inland Revenue, KiwiSaver’s central administrator, show as of September 2024, there were 184,544 people enrolled in KiwiSaver between the ages of 0-17 years-old.
That’s down 21,267 from the 205,811 in that 0-17 age group a year earlier in September 2023.
Research firm Morningstar which tracks KiwiSaver assets, found KiwiSaver assets rose by $3.5 billion to $110.8 billion in the June quarter.
20 Comments
ANZ just wants more money that can be used to pump the housing market.
It's the banks, real estate industry and landlords influence on the government that have created the economic farce that we have on our hands today.
The solution to most of our problems is to bring back unloopholed land tax and use the proceeds to reduce GST and income tax. Then you would see our society and economy run way more efficiently.
I think from the point of view of school leavers at 16, or even the near half who will graduate highschool under 18 should be entitled to the same government contribution and employer contribution as others when they work.
The banks perspective is self interested, but the rights of the workers should be fair. It is also strange employer can save this and not pay an employer contribution for those over 65. I can see justification for no government contribution due to super payments and readily accessible use at that age.
It is also strange employer can save this and not pay an employer contribution for those over 65.
Yes strange, however it could be argued to be incentive to hire or keep those over 65 in the workforce as one less barrier to subconscious ageism that we all know exists out there.
The Government has no business using taxpayers' money to subsidise anyone's KiwiSaver contributions, whether they are under 18 or over.
This subsidy should cease, and the $1 billion a year being spent on those $521 subsidies should be going into the NZ Superannuation Fund.
It sounds like a good idea and would have a very high benefit cost ratio. It seems unfair that a 17 year old (or below) working a part time job doesn't get the contribution but everyone one does.
It would also be a good education for young people who can get the idea that capital is also something that can be invested and will grow over time, rather than just something to spend quickly.
Govt contributions to say over 16 year olds would make sense as many that age have part time jobs so doesn't seem fair they miss out (if contributing)
I made sure there was over $1000 being contributed to my childrens kiwisaver so they got the $500 govt contribution - no doubt the stats aren't great of youth contribution to kiwisaver I'm guessing
I would support anyone regardless of age who is paid via PAYE and is making employee contributions being eligible for Government contribution up to age 65 (or whatever age NZ Super becomes available if age rises in the future) and I believe employers should be compelled to make an employer contribution regardless of the employee's age. For those younger than 18 it encourages them to begin what hopefully becomes a life time habit to invest for their retirement and for those over 65 I fail to see why an employer can in effect reduce the their overall remuneration simply because they turn 65. It not as tho those who are 64 on a Tuesday suddenly become less productive on the Wednesday when they turn 65.
According to ANZ, a five-year old who joins a KiwiSaver scheme today could be on track to save more than $100,000 by their mid-thirties.
Great, that sounds like a decent first home deposit.
If they only start at 15, then it might be 45 to get a deposit together by which time it starts to get harder to justify the 25-year term!
ANZ - looking out for you, not their loan book...
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