Some of about a million people missing out on free money paid into their KiwiSaver do not know about it, while some don't trust future governments not to mess with the scheme, a financial advisor says.
Nearly a million New Zealanders will not reap the benefit of cash contributions to their KiwiSaver that could grow into tens of thousands of dollars by the time they retire, because they are failing to take advantage of what is on offer.
A report by financial advisory service National Capital estimated roughly half of this group were not contributing anything to the scheme, and the other half were not saving enough to qualify for all of the annual $521 government top-up. (Though the government does match KiwiSaver savings dollar for dollar until their annual savings reach the point they qualify for all of the maximum $521 top up).
National Capital director Clive Fernandes told Checkpoint the unclaimed funds on offer amounted to about $423 million a year.
"It's actually a very simple calculation, $20 a week" would lock in the full government contribution, he said.
While more research was planned on why people were not receiving the $521, he said conversations with people in this group showed it was usually one of three reasons.
Many struggle to afford the savings: "The cost of living crisis - some people do find it hard to put in that approximately $1000 [a year] they need to put in to get that government contribution."
Another major group just did not know about what was on offer, or worried it might be complex or difficult to organise.
But a third group that was smaller and seemed to be growing was particularly concerning, Fernandes said - those who did not trust KiwiSaver.
"We've been hearing about this mistrust in KiwiSaver right from the start ... they are afraid that the government might change the rules on them, making KiwiSaver more inaccessible.
"[They] don't trust their money is safe enough in KiwiSaver, and I believe different governments tinkering around with KiwiSaver rules doesn't really help ... constant tinkering with KiwiSaver around the edges might be leading this group to increase in number. And the lack of trust leads to lack of engagement."
Fernandes said KiwiSaver needed, but was not achieving, widespread engagement.
The research team used an index to test how engaged the population was with KiwiSaver. For the retirement scheme to be effective, they calculated those engaged enough with KiwiSaver needed to be at an index level of 68.8.
However, their research returned an engagement index level of 59.
"Kiwis are not invested in the right way in KiwiSaver or are being way too conservative, and this conservativeness is going to end up in us losing out on tens of thousands at retirement."
It was very important for everyone to get financial advice about retirement and KiwiSaver, he said.
"For each of us, enough [retirement savings] will be very very different, it all depends on what your income is, what your goals are, how far you are from retirement."
And while that may not have been easy for some people to access previously, it was becoming more attainable.
"Luckily, because of technology and automation the advice is becoming more and more accessible."
A KiwiSaver Health Check form available online on the National Capital website was one example, he said.
