New Zealand has spent decades helping people save for retirement. Now we need to put the same energy into helping them spend those savings well.
That urgency was a clear theme of Public Trust’s Corporate Trustee Services decumulation webinar. The discussion brought together Retirement Commissioner David Boyle, Lifetime Retirement Income Founder and Managing Director Ralph Stewart, and Russell Investments Director of Retirement Strategy, Australia and New Zealand, Joel Atputharaj, to explore what the industry can do now to better support members through retirement, not just saving towards it.
David Callanan, Public Trust’s Corporate Trustee Services (CTS) General Manager, explained there was opportunity for industry-wide collaboration across providers, agencies and policymakers to improve outcomes for New Zealand’s ageing population.
“If we get it right, the opportunity really is significant. Not just commercially, but socially. We can help retirees make informed choices, use their savings with confidence and enjoy the retirement that they've worked hard to build.”
David Boyle spoke of the challenges Kiwi face, the main one being so many in the future will be renting. NZ Super income was based largely on someone owning their own home, hopefully without a mortgage by the time they retire, he said.
“There’s quite a divide. Those who are retired today (many with their own home) and those who, over the next few years, decades, are entering a period of a lot of uncertainty,” he said.
“Research shows only around 28% of people aged between 55 and 64 have a good idea what income they may need in their retirement years. We can do a lot better in that space to help people before they get there – being the ambulance at the top of the cliff is important.”
During the panel session, hosted by Marisa Tucker, CTS Head of Client Services – Wellington, David Boyle explained KiwiSaver providers could support members not just accumulate, but decumulate, and plan and strategise the way they’d be enjoying their retirement.
A barrier for many was that personalised financial advice was expensive and out of reach. Boyle said there was an opportunity to improve the information and tools available on the Sorted website.
Ralph Stewart, Founder and Managing Director of Lifetime Retirement Income which offers two decumulation products shared: “I think it’s about getting a mind shift in the industry to start thinking about decumulation in active terms, not conceptual terms.”
His call to the industry was for greater urgency.
“I’d love to see a greater sense of immediacy, a greater focus on the tools that are available. The New Zealand industry has a big focus on saving for retirement, for those people who are working today. I am worried about the people who are having their retirement now. And there’s a real commercial opportunity too for the industry, don’t be frightened of it.”
Building innovative decumulation tools can be expensive and difficult, and entails significant complexity, he said.
Challenges retirees face include not owning their own home, not being able to live off NZ Super alone, not knowing how long they’d live for, and a lack of desire to talk about death and the future, Stewart said.
“People are very nervous to use their capital to generate an income, so we need to give people confidence so they know the products are safe and they can trust us, and it’s not too complicated.”
Australian-based Joel Atputharaj from Russell Investments brought his experience from across the Tasman. He said New Zealand also has an advantage: it can learn from Australia's experience and start developing better retirement solutions before KiwiSaver balances become significantly larger.
Using a surfing analogy, he shared: “New Zealand has this opportunity to start paddling now, creating the retirement solutions and lifting retirement literacy across the membership early, ahead of the wave as it comes,” he said.
However, he cautioned against viewing decumulation purely as a product problem.
“Retirement is not just about the product. Retirement is about the broader solution,” he said. “It’s the ecosystem of tools, help, guidance, advice and support sitting around the product.”
Personalisation was important, as people enter retirement with different savings, assets, income, circumstances and aspirations. Atputharaj suggested providers can start conversations earlier, help members identify their retirement goals and then tailor investment strategies, guidance and support around it.
“Full financial advice is the gold standard if you can afford it. But many can’t, so you need to figure out a way to service customers in other ways.”
The message from the webinar was clear: New Zealand has an opportunity to get ahead of its retirement income challenge, but doing so will require action from across the industry. Products are part of the answer, but so too are earlier conversations, accessible guidance and advice, personalised support and practical tools that give people greater confidence to use the assets they have built up.
As David Boyle said, the goal should ultimately be to help people “genuinely spend a lot of that time enjoying their retirement years”.
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