Removal of incentive means more work for advisers: Matthews
Financial advisers will have a bigger role to play in the distribution of KiwiSaver now the Government has dropped the $1000 kickstart incentive, a banking expert says.
Monday, May 25th 2015, 6:00AM
by Susan Edmunds
It was revealed in the Budget last week that the $1000 will no longer be available to new KiwiSavers.
The payment has been in place since the scheme started in 2007 but was dropped in the Budget this year, effective immediately.
It has cost the Government $2.5 billion in the eight years the scheme has been running.
Massey University banking expert Claire Matthews said the move would initially put some people off signing up.
But she said that made the role of advisers all the more important. “Financial advisers have a really important role to point out that it’s only $1000 and in a 30- or 40-year scheme $1000 is neither here nor there. In a year or two you’ll have $1000 through the member tax credit. It’s a nice to have but I don’t think it’s that important.”
Mercer New Zealand managing director Martin Lewington said the $1000 would have been enough of an incentive to convince some people if they were undecided about signing up.
“If I’m trying to reflect back to when I was 18, it would have made me go into KiwiSaver… $1000 free money , I’m sure I’d have tipped over rather than say 'leave it there and I’ll do something else with my disposable income'.”
But he said the move would make it easier for the Government to bring in auto-enrolment. “If they do an auto-enrolment sweep, it’ll cost them $1000 per KiwiSaver less.”
Lewington said he would have preferred that the kickstart had not been dropped but now that it is gone, the Government should avoid making further changes to the scheme. “Once you start tinkering with something you lose trust. If they threw it back in there it’s tinkering again and it sends mixed signals.”
Adviser Allan Rickerby said the removal of the kickstart had been expected and would not be an issue once the scheme was made compulsory, which he expected to happen before long.
| « [BUDGET] New KiwiSaver members miss out on Kick Start | Budget change a headache for providers » |
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