Wed, 24 Aug 2011
Post-Budget KiwiSaver sign-up slump continuesKiwiSaver provider TOWER Investments has released its monthly analysis of the IRD’s KiwiSaver member count for the month of July, 2011.
“Although July’s sign-ups inched net total KiwiSaver membership closer to 1.8 million, the rate at which new members joined slumped noticeably,” said Sam Stubbs, Chief Executive Officer of KiwiSaver provider TOWER Investments.
“Just over 18 thousand new sign-ups for July represented the lowest absolute increase since TOWER started to compile its KiwiSaver membership growth statistics series in January 2009,” he said.
“The percentage rates at which new members joined fell across the board for all joining methods, with monthly net total membership increase dropping to a new low of barely more than 1%.”
“This growth deceleration may indicate that KiwiSaver was viewed less positively by the public since the May Budget set out reduced government subsidies, increased taxation, and larger employer and employee contribution minimums to be phased in for the scheme over 2012-3.”
“Some potential opt-in members may also have been put off because July was another nerve-wracking month for the markets, with US politicians playing chicken over default on America’s federal debt and ongoing scares about the financial soundness of southern European countries.”
“These negative factors may have deterred some opt in via provider enrolments, the monthly percentage rate for which dropped by a third to under 1%.”
“By contrast, automatic enrolments by employer held up at over 1%, even if down on June, but the overall trend for this type of enrolment has been in decline since it spiked out at almost 2.1% back in March.”
“Steady decline in monthly percentage increases for automatic enrolments could be pointing to a slowdown in the rate of employment growth over recent months.”
“Widespread public discussion over whether KiwiSaver should become compulsory in some form is occurring against a background of falling join up rates for the scheme.”
“The downward trend for join up rates could suggest that most people who want KiwiSaver membership may already belong to the scheme.”
“If July’s diminished monthly membership growth rates persist, there should be a bit under 1.9 million KiwiSavers by the end of 2011, with the two million member mark not likely reached until around March 2012,” he said.
ENDS (Please see accompanying table below and separate PowerPoint for key statistics)For further information please contact: Sam Stubbs, CEO TOWER Investments