SuperRatings rates NZ savings system

The New Zealand voluntary long-term savings system KiwiSaver was found to be a very efficient retirement system, with an 80 per cent engagement level, a complete contrast to the Australian system.

This is the finding from SuperRatings, which released its formal 2015 ratings for the KiwiSaver after researching the market for more than two years.

SuperRatings looked at a variety of factors beyond investment performance and fees, and awarded eight schemes its highest Platinum rating.

SuperRatings found the Inland Revenue Department had a vital role in keeping the system cost-effective and efficient compared to other global retirement systems.

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"In addition, the use of a single account for each individual adds further efficiencies to the system, mitigating the multiple account issues currently evident in Australia," SuperRatings CEO Adam Gee said.

Gee also said the option of first home withdrawals under the system has lured younger age groups to engage with it.

This is not the case in Australia, where balances are amassed only for retirement. Under the Australian system, almost 80 per cent of members are still within default arrangements

But Gee also noted the New Zealand system has more divergence in the investment structures unlike Australia, where investment approaches are more homogenous.

This could result in "material variances" in investment results for members based on how the asset classes perform.

"Unlike Australia, where the majority of conservative balances and growth investment options are reasonably similar allocations to asset classes, the KiwiSaver system shows large differences, which will make it challenging for members to easily compare options," Gee said.