KiwiSaver membership growth trends over 2012 suggest market saturation reached 

Default KiwiSaver provider TOWER Investments has released its regular monthly analysis of the IRD’s aggregate KiwiSaver enrolment statistics for the month of December, 2012.

“Analysis of the IRD’s official KiwiSaver membership statistics shows there was a surprisingly sharp fall in new KiwiSaver membership growth in December,” said Sam Stubbs, Chief Executive Officer of KiwiSaver default provider TOWER Investments.

“At just over 9,000 new sign-ups, KiwiSaver membership growth for the month of December, 2012, was the lowest TOWER has recorded since it started compiling its own statistical series on KiwiSaver membership growth trends in January 2009.”

“The general pattern observable for 2012 was that KiwiSaver membership growth kept slowing down as the year progressed, which suggests that in its present form as a non-compulsory, opt-out system, KiwiSaver is reaching maturity and now achieves only marginal new membership growth.”

“It could be a reasonable inference that in the absence of compulsory workplace savings in New Zealand, the present two million KiwiSaver membership mark represents about saturation level for the population, taking into account that over a quarter of a million people have elected to exercise their right to opt out.”

The table demonstrates the overall decline in monthly membership growth rates for KiwiSaver.

Table 1: KiwiSaver membership monthly growth rate trends for 2012

Source: TOWER Investments

“The biggest casualty for KiwiSaver membership growth in December 2012 was opt in via provider, which slumped to just 0.37% monthly rate of increase.”

“This decline was a sharp drop from prior monthly growth rates for opt in via provider, but continued the trend evident over 2012 for this particular joining method to fall off markedly in significance as a way to join KiwiSaver.”

“The joining method which performed best over 2012 in percentage growth terms, albeit also declining, was automatically enrolled by employer (ie., enrolled into the KiwiSaver default provider system).”

“It is evident from the way in which monthly percentage growth rates for the automatically enrolled by employer category have consistently exceeded rates for the opt in via provider category since June 2011 and right across 2012 that the KiwiSaver default provider system is working very effectively at inducting new KiwiSaver members.”

“The KiwiSaver default provider system is presently under official review, but the 2012 growth rate figures speak for themselves in showing that the present KiwiSaver default funds are doing what they were designed to achieve in slowly but steadily recruiting working New Zealanders into KiwiSaver.”

“TOWER supports the reform of the present KiwiSaver default provider system so that KiwiSaver default funds are made into series of discrete life-cycle funds, with new members enrolled into the particular default fund most generally suitable for retirement saving respective to their age bracket.”

“New KiwiSaver default fund members could have the ability to opt instead into a capital stable fund if they were saving primarily for a home deposit,” said Mr Stubbs.

For further information please contact: Sam Stubbs, CEO TOWER Investments, Tel: 09 369 2284, Mobile: 021 491 547, Email: sam.stubbs@tower.co.nz

Appendix 1: IRD’s KiwiSaver membership statistics (current scheme assigned method) as at 31/12/2012

 Source: TOWER Investments

Appendix 2: KiwiSaver growth statistics at a glance as at 31/12/2012

Source: TOWER Investments. 

For original IRD KiwiSaver statistics, visit www.kiwisaver.govt.nz/statistics/