The KiwiSaver system, designed to help Kiwis save for their future, may inadvertently leave older participants struggling with decisions about their retirement funds. While the system offers a wealth of information and guidance, it often falls short in providing personalized financial advice tailored to the unique needs of those approaching retirement age. This is a critical issue, as the transition from accumulation to distribution of savings can be a challenging and complex process.
Romil Ghelani, Head of Financial Advice, highlights a significant gap in the system. He notes that while there are products to assist with retirement planning, they are not as widely available or accessible as in other countries. This lack of personalized advice can leave older Kiwis feeling overwhelmed and uncertain about their financial future.
The KiwiSaver providers, banks, and financial advisers form a comprehensive support network. However, Ghelani emphasizes that professional financial advice is a valuable addition to this ecosystem. Unfortunately, these services are often geared towards high-net-worth clients, leaving the majority of Kiwis to rely on less personalized information and guidance.
As more New Zealanders approach retirement with substantial savings, the need for tailored financial advice becomes even more pressing. Ghelani argues that this presents an opportunity for advisors to bridge the advice gap. However, the current system may not adequately address this need, potentially leaving older participants vulnerable to making poor financial decisions.
Several major KiwiSaver providers are taking steps to address this issue. ANZ Investments, for instance, proactively contacts members a year before they can access their funds, encouraging them to consider their options. They offer free financial advice through their investment advisers, helping members understand their choices and develop suitable investment strategies.
Similarly, ASB and Milford Asset Management provide free access to financial advisers and digital tools to explore withdrawal options. ASB also offers tailored advice sessions for those turning 65, ensuring they are well-informed about their retirement decisions. These initiatives are a step in the right direction, but more can be done to ensure that all KiwiSaver members receive the support they need during this critical life stage.
The misconception that KiwiSaver members must withdraw their funds at age 65 is another challenge. Sian August from ANZ Investments clarifies that members can keep their funds invested until they need them. Regular withdrawals can provide a steady income stream, and some members continue contributing, either through salary or lump-sum contributions, even after age 65.
In conclusion, while the KiwiSaver system provides a solid foundation for retirement savings, it must evolve to offer more personalized and proactive financial advice. By addressing the advice gap, the system can better support older participants in making informed decisions about their retirement funds, ensuring a more secure and comfortable future for Kiwis in their golden years.
