New research done for Te Ara Ahunga Ora, the Retirement Commission, shows that the KiwiSaver balances for young Kiwis are in some instances only a third or less of what they might have been - and withdrawals to buy houses appears to be a main contributor to that situation.
The commission hired actuaries Melville Jessup Weaver to collect comprehensive data about KiwiSaver balances across age groups and gender. The MJW report contains data on 2,944,050 members with total balances of $85.44 billion as at 31 December 2021, representing approximately 93% of the total KiwiSaver member base.
As one part of the research, MJW did modelling to develop hypothetical scenarios for people who had invested in KiwiSaver for 14 years (the maximum time possible) without making any withdrawals and compare them to the average balances.
This was the outcome:
For example a male that was 20 in 2007 could potentially have had $66,433 as a balance by the end of last year. In reality the average balance was $22,738. A female that was 20 in 2007 could potentially have had a balance of $58,289 - but in reality the average balance was $19,141.
Te Ara Ahunga Ora Director, Policy, Suzy Morrissey said when comparing current balances to what would have been possible for a median wage earner to have accrued over the 14 years of KiwiSaver, "we see that they are lower, on average, across all age groups".
"Part of this can likely be linked to first home deposit withdrawals and saving suspensions, and people not participating in the scheme for the full 14 years that it has been available."
According to figures compiled by Inland Revenue, withdrawals for buying a first home have been rising every year. In the year to June 2021, almost $1.6 billion was withdrawn from KiwiSaver accounts to buy a first home. Recent monthly data suggests this has slowed more recently, however, and for the latest month available - February - the amount withdrawn for a first home was $73.1 million, down from $106.6 million in February 2021.
According to the MJW report findings the average KiwiSaver balance is $29,022, with the average balance for a male 20% higher than the average balance for a female – males ($32,553) and females ($27,061).
The findings also reveal 40% of KiwiSaver members have a balance of less than $10,000.
Some 21% of those aged 51-65 have less than $10,000 and they may not have saved as much as they would have liked for their retirement.
Among other age groupings:
- 19% of those with less than $10,000 are aged 17 and under
- 24% of those with less than $10,000 are aged 18-25
- 22% of those with less than $10,000 are aged 26-35
Morrissey said access to the data was particularly useful to support the work under way on the three-yearly Review of Retirement Income Policies, in which a wide range of areas relating to retirement are being considered.
The Retirement Commissioner will submit a report to government in December providing analysis on the effect of retirement income policies for New Zealanders and identifying emerging issues for future policy consideration.
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