The journey of KiwiSaver has been an eventful one, and yet this New Zealand savings vehicle has successfully transitioned from timid toddler to composed adolescence.
A lesson for members is not to lose sight of the end-game. A tolerance for volatility, where possible, offers scope for a greater pool of retirement assets in the long-run.
David Scobie, senior consultant at Mercer, reflects on the risk and return outcomes experienced by KiwiSaver members since inception.
What was on your investment mind back in 2007? The bursting of the US housing bubble? The Bank of England bailing out the Northern Rock mortgage company? The wisest amongst us were perhaps contemplating the dawn of a far-reaching financial calamity, warily checking share prices on a newly-released gadget known as an iPhone. Meanwhile there was another notable invention cautiously rearing its head that year – KiwiSaver. Born amid an inauspicious economic environment, but gently encouraged by some state-sponsored sweeteners, the scheme quickly grew into a force to be reckoned with.
Today, at some $37 billion all-up, KiwiSaver stands shoulder-to-shoulder with the largest of New Zealand’s investment funds. So what path of performance has this savings saviour travelled?