KiwiSaver to be reviewed to invest in local growth

Wednesday, 31 January 2024

Commerce and Consumer Affairs Minister Andrew Bayly with Financial Markets Authority chief executive Samantha Barrass.

More KiwiSaver money should be invested in New Zealand instead of being sent overseas to be invested in giant passive funds, Commerce and Consumer Affairs Minister Andrew Bayly.

“We’ve got roughly $200 billion of capital in New Zealand – $100b in KiwiSaver, $60b in NZ Super and a similar amount in ACC,” Bayly told a gathering of fund managers and insurers in Auckland on Wednesday.

“Most of that is invested offshore in passive funds around the world, not all of it, but a large portion of it,” Bayly said.

He envisioned between 5% and 10% of the money being invested in “great New Zealand businesses” to help them grow both the economy, and people’s retirement savings.

“I really want to help the industry take the opportunity, if they so choose, to invest in the alternative asset class, which is supporting great New Zealand businesses.”

Bayly said KiwiSaver schemes investing in these companies could provide an alternative to foreign private equity funds swooping in and buying New Zealand businesses.

Commerce and Consumer Affairs Minister Andrew Bayly signals review of KiwiSaver.

KiwiSaver providers had told him there were some small changes that the Government could make to KiwiSaver settings to make investing in such companies, he said.

Bayly signalled that he would begin a KiwiSaver review this year, which was welcomed by Richard Klipin, chief executive of the Financial Services Council, which hosted the gathering.

“It’s something I will be turning my mind to in the second half of the year,” Bayly said.

Bayly said he was concerned New Zealanders were not as financially literate as the Government wanted them to be, and they weren’t always prepared for retirement.

Sam Stubbs, chief executive of Simplicity KiwiSaver, said New Zealand needed more dynamic capital markets, saying Simplicity had just sold its holdings in Briscoes and The Warehouse because they were not liquid enough.

He said listing Kiwibank on the NZX would be a good move, but there were things the Government could do to get more KiwiSaver money invested into building New Zealand homes and infrastructure.

This could include creating public private partnerships to build things like toll roads that KiwiSaver schemes could invest in.