B30A FINANCIAL MARKETS AUT RITY TE MANA TATAI HOKOHOKO - NEW fma.govt.nz AUCKLAND Level 5, Ernst & Young Building  2 Takutai Square, Britomart  PO Box 106 672, Auckland 1143 Phone: +64 9 300 0400  Fax: +64 9 300 0499 WELLINGTON Level 2, 1 Grey Street  PO Box 1179, Wellington 6140 Phone: +64 4 472 9830  Fax: +64 4 472 8076 September 2015 ISSN No. 2324-5522 (Print) ISSN No. 2324-5530 (Electronic) Presented to the House of Representatives pursuant to Section 159 of the KiwiSaver Act 2006 Contents Executive summary 03 Purpose of this report 03 Our role 03 Highlights 03 Work underway 04 Key trends 05 Key activities 08 Facts at a glance 10 Appendices 13 Appendix 1 – Income and expenditure summary 14 Appendix 2 – Membership summary 15 Appendix 3 – Age and gender profile of members 17 Appendix 4 – Profile of new default and other members 18 Appendix 5 – Summary of non-contributing members 19 Appendix 6 – Investment fund summary 19 Appendix 7 – Switches out of default investment product into other investment funds 20 21 Switches between investment funds Appendix 8 – Profile of switches between investment funds 22 Appendix 9 – Analysis according to size of scheme assets 22 Appendix 10 – Analysis by nature of scheme 23 Appendix 11 – Analysis according to nature of scheme and size of scheme assets 23 Glossary 25 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Executive summary Purpose of this report The main objective of the Financial Markets Authority (FMA) is to promote the development of fair, efficient and transparent financial markets. Our aim across all our activities is to raise the standard of conduct, and increase investor and market confidence to support economic growth in New Zealand. We are one of several government agencies with a role in regulating KiwiSaver, which amounts to a substantial part of New Zealand’s collective wealth. For many New Zealanders, KiwiSaver may be their first investment and may be a large part of their retirement savings and ultimate financial security. We are required to report each year on our main KiwiSaver activities. This year’s report covers the period from 1 July 2014 to 30 June 2015, and contains a summary of the statistical returns required to be lodged by KiwiSaver schemes as at 31 March 2015. Our role • together with Inland Revenue, registering new schemes, winding up schemes, and overseeing mergers • ensuring resources are available to investors that allow them to make informed decisions about KiwiSaver. Highlights In the year to 31 March 2015 • Nearly 200,000 new members joined KiwiSaver, taking total membership to almost 2.5 million people. • Total assets increased by a third to just under $28.5 billion. This was mostly due to strong investment returns, which doubled from $1.5 billion to $3 billion during the year. • Ten schemes, representing 88% of members, each have at least $1 billion in assets. This is up from seven schemes last year. We are primarily responsible for the administration, monitoring and enforcement of the KiwiSaver Act 2006, parts of which have been replaced by the Financial Markets Conduct Act 2013. Our role includes: • Member contributions (not including lump sums and other voluntary contributions) increased by 20% to $2.4 billion. Crown contributions increased by 27% to $927 million, and employer contributions increased by 21.5% to $1.5 billion. • monitoring compliance with the disclosure regulations, which now require KiwiSaver providers to produce quarterly and annual disclosure statements • More than 265,000 members transferred $2.5 billion between schemes. With mergers excluded, the number is similar to last year, and is more than double the amount in 2013. • managing a Default Monitoring Panel, which oversees the nine default schemes in which members are automatically enrolled if they don’t choose their own scheme • The nine default schemes increased their combined assets to $4 billion. However, their share of total assets fell from 17% to 14%, and their share of total membership fell from 20% to 18%. • monitoring the licensed KiwiSaver trustees, who play an important role as frontline supervisors of the retail schemes (those chosen by members) PAGE 3 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT • Just over 1 million members are regarded as noncontributors, which means they have not made a contribution in the previous two months, or they have failed to make their contracted payments. The percentage of non-contributing members fell from 44.5% last year, to 42.6% this year. • More than $232 million was transferred into KiwiSaver from overseas schemes this year, and from other superannuation schemes in New Zealand. This is almost double the amount last year, partly due to $78 million being transferred from Australia. • Around 93,000 KiwiSaver members switched between investment funds this year, involving almost $1.4 billion. A net $100 million was switched out of active default funds and conservative funds. The biggest gain was in balanced funds, followed by growth funds. • This is the third year that members 65 and over, who have been in the scheme at least five years, have been able to withdraw their KiwiSaver balances. They withdrew $422 million, a 12.7% increase on last year. • First-home purchase withdrawals increased from $169 million last year to $213 million this year. • Almost $43 million was withdrawn due to significant financial hardship, a 37.5% increase on last year. PAGE 4 Work underway In December 2014, we published our Strategic Risk Outlook 2015, which identified our seven strategic priorities for the next three years. Six of these priorities have direct relevance to KiwiSaver: governance and culture, conflicted conduct, capital markets growth, sales and advice, investor decisionmaking, and effective frontline regulators. We have already committed to improving the comparability of data provided by KiwiSaver schemes in their quarterly disclosure statements. We are consulting on the use of fund names and risk indicators, and we are reviewing how fees and returns are calculated. The aim is to achieve consistency, for KiwiSaver and other managed funds. KiwiSaver members should receive appropriate advice and support when they transfer schemes, and we continue to be concerned about possible mis-selling, particularly sales processes and advice about switching. We are reviewing aspects of sales and advice practice, based on information we sought from 10 providers that cover more than 80% of KiwiSaver members. Our findings, based on this review and our monitoring work, will be reported in our forthcoming Sales and Advice report. FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Key trends Unless stated otherwise, the following statistics are taken from the 2015 annual statistical returns, and refer to the period from 1 April 2014 to 31 March 2015. Membership Switching funds Membership increased during the year from almost 2.3 million members to almost Around 2.5 million members, a rise of 8.3%. Although this is an 8.3% increase over the previous year, growth has slowed from a 9.6% increase in the previous two years, and a 14% increase in 2012. Earnings The amount earned from the investment of scheme assets doubled from $1.5 billion last year, to just over 3 billion $ 93,000, KiwiSaver members made switches between their investment fund options this year, involving almost $1.4 billion. More than 260 members switched their type of fund at least five times during the year. Contributions Crown contributions increased by 27% to $927 million this year. This largely reflects strong investment returns, given that assets increased by only 33%. during the year. As of 21 May 2015, new members are no longer eligible for the $1000 kick-start payment from the Crown. Transfers Employer contributions increased during the year by More than 265,000 members transferred almost 2.5 billion $ between KiwiSaver schemes in the year to the end of March. Although the total amount is lower than the $3.6 billion transferred last year, a large proportion of last year’s total was due to mergers at two of the largest providers. Excluding mergers, 170,000 members transferred schemes last year. The total this year, on a like-for-like-basis, is 177,000. We have previously expressed concern that KiwiSaver members do not have access to appropriate financial advice when considering transferring between KiwiSaver schemes or switching funds, and we are continuing to monitor this issue. 21.5% to $1.5 billion This is the second full year that employers have been required to contribute at least 3% of an employee’s salary or wage. Lump sum contributions almost doubled during the year, from just under $140 million last year, to just over $275 million this year. Other voluntary contributions (not including those made at a standard contribution rate) fell slightly, from almost $160 million last year, to just over $137 million this year. PAGE 5 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Non-contributing members Types of schemes Just over In July 2014, nine default schemes (AMP, ANZ Default, ASB, BNZ, Grosvenor, Kiwi Wealth, Mercer, Fisher Funds TWO and Westpac) were appointed for a seven-year term. Membership of these schemes (where members are automatically enrolled if they don’t choose their own scheme) fell by 7,559 people during the year. 1 million members are regarded as non-contributors, which means they have not made a contribution in the previous two months, or they have failed to make their contracted payments. A significant number of these are under 17, or self-employed. Many self-employed members choose to make lump sum contributions close to the end of their tax year, rather than make regular contributions during the year. It also includes members on contribution holidays. The percentage of non-contributing members has fallen from 44.5% last year, to 42.6% this year. Transfers from other superannuation schemes More than 232 million $ was transferred into KiwiSaver from overseas schemes this year, and from other superannuation schemes in New Zealand. This is almost double the amount last year, and is largely due to new rules which made it easier to transfer certain schemes from overseas. Of this total, almost $78 million was transferred from Australian schemes to KiwiSaver, more than double the amount last year. Around $1.1 million was transferred out of KiwiSaver to Australian schemes. This year was the first full year of trans-Tasman portability of retirement savings. The remaining $154 million came from registered superannuation schemes elsewhere in the world, including New Zealand. This is up from almost $91 million last year. PAGE 6 The total number of retail schemes (those chosen by members) fell from 31 to 27. However, their total members increased by 197,696 people. Membership of the 12 restricted schemes (open to specific groups of people employed in the same company or industry or some other defined group) increased slightly, but they continue to account for only 1% of total membership. Withdrawals During the year, 8,911 members withdrew funds of $42.9 million under the significant financial hardship provisions of the KiwiSaver Act, a 37.5% increase on last year. Since KiwiSaver’s inception, 41,980 members have used this provision. This is the third year that members 65 and over, who have been in the scheme at least five years, have been able to withdraw their KiwiSaver balances. They withdrew $422 million, a 12.7% increase on last year. First-home purchase withdrawals increased from $169 million last year to $214 million at the end of March this year. On 1 April 2015, new rules came into effect for first-home withdrawals that effectively allow larger sums to be withdrawn. FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Exempt employers, and complying superannuation funds Size of schemes Ten schemes The number of exempt employers and complying superannuation funds are continuing to decline. At the end of June 2015, 274 private sector employers were classified as exempt employers, down from 302 the previous year. There were 24 complying superannuation funds at the end of June, compared to 26 the previous year. each have over $1 billion in assets, up from seven last year. These schemes represent 88% of members. Another six schemes have between $200 million and $1 billion in assets, representing 9.5% of members. Employer-preferred schemes Number of schemes An employer can notify the Commissioner of Inland Revenue that it has chosen a preferred KiwiSaver scheme in which all of its eligible employees will be automatically enrolled unless they choose to join another scheme. This year, 18,692 employers had chosen a preferred KiwiSaver scheme, up on 18,088 last year. There was further consolidation of schemes, with the total number dropping from 43 to 39. Schemes deregistered in the year to June were FirstChoice, Kiwibank, Law Retirement, and Brook Professional. Membership profile The percentage of members who are women has fallen slightly this year, although they still slightly outnumber male members. The proportion of members 17 and under has also dropped slightly, to 14.3%. Members aged 51 to 65 have slightly increased, while those over 65 have increased to 3.2%. Default schemes Default providers are now required to report to the FMA on financial literacy initiatives, including their communications to members to encourage them to choose an investment fund. We will report on this next year. New regulatory regime The Financial Markets Conduct Act 2013 (FMC Act) was a fundamental overhaul of financial regulation in New Zealand. The first phase of the Act came into effect in 1 April 2014, but it will not be fully implemented until 1 December 2016. The main changes applicable to KiwiSaver managers and trustees are contained in part 4 of the FMC Act, which came into effect on 1 December 2014. This establishes governance rules for KiwiSaver schemes, as well as register and record-keeping duties. It also gives supervisors and the FMA the power to intervene if required. There is a two-year transition period, which means KiwiSaver managers do not have to comply with the new Act until 1 December 2016. They can elect to comply earlier by choosing an ‘effective date’. However, no schemes had yet moved to the new regime at the end of June. Managers need to ensure they will be able to meet the requirements of the FMC Act before the end of next year. PAGE 7 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Key activities The following activities relate to the period from 1 July 2014 to 30 June 2015. Money Week As part of our contribution to Money Week, which ran from 13-17 October in 2014, we publicised research we commissioned which questioned New Zealand investors’ attitude to risk. The research revealed confusion about the risk profiles of different investments, including KiwiSaver investments. It also revealed that a large percentage of those surveyed (42%) erroneously believed KiwiSaver was guaranteed by the Government. In our publicity, we aimed to correct these perceptions and directed the public to resources, including the Sorted website and our own website, for more information. Strategic Risk Outlook In December 2014, we published our Strategic Risk Outlook 2015, which identifies our seven strategic priorities for the next three years. Six of these priorities have direct relevance to KiwiSaver. • Governance and culture – Ensuring boards and directors of KiwiSaver businesses lead with the right culture and values. • Conflicted conduct – Focusing on safeguards for firms to avoid mis-selling and fee-driven models, particularly in vertically integrated businesses. • Capital markets growth – Recognising the increasing role KiwiSaver plays in deepening our capital markets. • Sales and advice – Focusing on mis-selling and KiwiSaver switching processes. • Investor decision-making – Ensuring investors have comparable information on KiwiSaver through quarterly and annual disclosure statements, and ensuring they have access to advice once they are eligible to withdraw their assets. PAGE 8 • Effective frontline regulators – Ensuring KiwiSaver supervisors have the capability and resources to effectively carry out their roles. Guidance We engage with KiwiSaver providers to address problems as they arise, and this includes publishing guidance on particular issues as required. • In December 2014, we issued guidance for KiwiSaver managers on how to transition to managed investment schemes under the new FMC Act. • In February 2015, we outlined the process for getting a certificate from the FMA to apply for registration of a new KiwiSaver, superannuation or workplace savings scheme. Other work underway this year includes: • consulting on the use of fund names and risk indicators, for KiwiSaver and other managed funds, with the aim of achieving consistency. This will help investors to more easily compare funds and to make better-informed decisions. • reviewing how fees and returns are calculated in quarterly and annual disclosure statements, and in offer documents. The aim is to get consistency among KiwiSaver providers and managed funds. • reviewing aspects of sales and advice practice, based on information we sought from 10 providers that cover more than 80% of KiwiSaver members. Our findings, based on this review and our monitoring work, will be reported in our forthcoming Sales and Advice report. FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Investor capability strategy Ongoing activities During the year we finalised our investor capability strategy, which sets out how we will work with other organisations and the financial sector to improve investor understanding and confidence. The strategy was launched by the Commerce Minister in July 2015 and aligns with the Government’s broader strategy on financial capability, to ensure our work is integrated with other government agencies. • We work closely with Inland Revenue (IRD) before registering any new schemes. There have been no new schemes registered during the year. We also work with IRD to ensure any scheme wind-ups are managed effectively, and to follow-up any member complaints received by their KiwiSaver call centre. We have identified KiwiSaver members as one of two groups we will focus on. This will include working with the Commission for Financial Capability and the financial services industry to develop shared messages and tools to improve investors’ understanding of KiwiSaver. We will also use the growing engagement with KiwiSaver (including by younger people using KiwiSaver for their first home) to discuss investing fundamentals and broader investment options. • We continue to manage the Default Monitoring Panel, which supervises the nine default schemes. • We monitor and update registers of exempt employers, and complying superannuation funds as their status expires. The registers can be found on our website. New website In March 2015, we revamped our website with improved navigation and content. As well as compliance information for those we regulate, the website has a KiwiSaver section for consumers, including information such as how to join KiwiSaver, fund types, and how to transfer funds from other countries. PAGE 9 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Facts at a glance These statistics are taken from the 2015 annual statistical returns, and refer to the period from 1 April to 31 March. 20141 2015 Change (in percentage points)2 Number of schemes 43 39 4 Contributing members 1.3 million 1.4 million 7.7% Non-contributing members 1.0 million 1.1 million 3.8% Total members 2.3 million 2.5 million 8.3% 28.5 billion 33.0% 3.0 billion 100% 2.4 billion 20.0% 275.4 million 97.1% 137.4 million 14.1% 1.5 billion 21.5% 926.8 million 26.8% 42.9 million 37.5% 213.8 million 26.7% 421.9 million 12.7% Membership Assets invested 21.4 billion $ Investment returns $ 1.5 billion $ 2.0 billion $ $ Member contributions Standard contributions Lump sum contributions $ 139.7 million $ 160 million $ $ Other voluntary contributions $ Employer contributions Crown contributions 1.2 billion $ 731.1 million $ $ $ Withdrawals 31.2 million Significant financial hardship $ $ 168.7 million $ 374.3 million $ First-home purchase $ Aged 65 or over $ Default schemes 20.0% 18.2% 17.1% 14.3% Total membership 78.9% 80.8% Total assets 80.7% 83.6% Total membership 1.0% 1.0% same Total assets 2.1 2.1 same Total membership Total assets Retail schemes Restricted schemes Note: 1 Some totals may not add exactly, due to rounding. 2 These figures are based on the actual, non-rounded totals. PAGE 10 % % FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Gender profile Women 2014 Age profile 2014 2015 51.4 50.4 Men 2014 % % 2015 48.4% 49.3% Change 17 and under 18-35 Change 36-50 51-65 66-75 Risk profile In the following pie charts, the assets of the top 10 KiwiSaver schemes are shown by benchmark asset allocation for the conservative, balanced and growth funds. 2015 14.9% 35.6% 25.0% 21.5% 2.9% 14.3% 35.7% 25.0% 22.0% 3.2% Change same same Balanced portfolio International shares 33.2% International fixed interest 19.5% Australasian shares 12.8% Conservative portfolio Cash 12.6% NZ fixed interest 11.7% Cash 31.4% Property 6.8% International fixed interest 28.2% NZ fixed interest 19.4% International shares 12.9% Other 3.4% Growth portfolio International shares 49.9% Australasian shares 5.5% Australasian shares 21.3% Property 2.3% Property 8.1% Other 0.3% Cash 6.5% International fixed interest 6.4% NZ fixed interest 4.0% Other 3.8% PAGE 11 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Member contributions* 2015 $2.4 billion 2014 $2.0 billion 2013 $1.5 billion 2012 $1.3 billion * Does not include lump sums and other voluntary contributions Assets invested 2015 $28.5 billion 2014 $21.4 billion 2013 $16.6 billion 2012 $12.7 billion Investment returns Number of members enrolled 2015 2.5 million 2014 2.3 million 2013 2.1 million 2012 1.9 million PAGE 12 2015 $3.0 billion 2014 $1.5 billion 2013 $0.4 billion .K D. D. A FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 1 Income and expenditure summary KiwiSaver schemes in force as at 31 March 2015 Default Active Total 3,659,076,396 17,744,469,597 21,403,545,993 Member contributions at section 64 contribution rate 450,479,581 1,931,852,598 2,382,332,179 Employer contributions 295,401,250 1,171,208,675 1,466,609,925 Crown contributions (section 226) and fee subsidies 183,978,308 742,812,985 926,791,292 Transfers of members’ accumulations into scheme from other KiwiSaver schemes 24,202,222 2,353,237,989 2,377,440,211 Transfers of members’ accumulations into scheme from registered superannuation schemes 5,027,674 149,387,661 154,415,334 Transfers of members’ accumulations into scheme from Australian superannuation schemes 4,428,872 73,564,773 77,993,645 Lump sum contributions 6,599,531 268,759,962 275,359,493 Other voluntary contributions over section 64 contribution rate 5,403,378 132,002,657 137,406,035 361,524,989 2,656,227,536 3,017,752,525 Opening balance of scheme assets at start of annual return year Categories of income for annual return year Income from investment of scheme assets Other income Total income from annual return year 2,760,025 1,339,805,828 16,721,136 9,495,775,971 19,481,160 10,835,581,799 Categories of expenditure for annual return year First-home purchase withdrawals Mortgage diversion withdrawals KiwiSaver end payment date withdrawals 25,317,342 188,455,245 213,772,587 7,620 261,623 269,243 47,525,950 374,388,821 421,914,771 Withdrawals on death 3,614,676 25,305,037 28,919,713 Serious illness withdrawals 3,046,413 16,246,842 19,293,255 Withdrawals or transfers on permanent emigration 3,166,648 12,059,767 15,226,415 Significant financial hardship withdrawals 6,091,885 36,825,176 42,917,060 Transfer of members’ accumulations out of scheme into other KiwiSaver schemes 756,516,352 1,764,712,719 2,521,229,071 Transfer of members’ accumulations out of scheme into Australian superannuation schemes 107,382 994,230 1,101,613 56,569 1,830,680 1,887,249 Amounts required to be paid under other enactments Invalid enrolments 4,365,644 2,044,419 6,410,063 Administration fees 15,283,184 58,252,246 73,535,430 Investment management fees 17,309,478 154,691,935 172,001,413 812,422 4,901,481 5,713,903 48,618,809 174,047,956 222,666,765 357,409 17,364,726 17,722,134 932,197,783 2,832,382,903 3,764,580,686 4,066,684,441 24,407,862,666 28,474,547,106 Trustee fees Taxation Other scheme expenses Total expenditure for annual return year Closing balance of scheme assets at end of annual return year Note: 1. The statistical returns are unaudited and may not include all transactions. 2. Some providers currently have an inability to differentiate between types of transfers, therefore there are discrepancies in transfers to and transfers from KiwiSaver schemes. PAGE 14 3. In the current year 14,584 members withdrew for the purposes of first-home purchase (46,149 members since inception). 4. In the current year 8,911 members withdrew funds due to significant hardship (41,980 members since inception). FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 2 Membership summary KiwiSaver schemes in force as at 31 March 2015 Default members Active Total 256,787 1,020,630 1,277,417 73,825 171,857 245,682 5,955 14,870 20,825 30,697 188,076 218,773 1,385 237,450 238,835 Members transferring into scheme from Australian superannuation schemes 26 926 952 Members transferring into scheme from registered superannuation schemes 22 906 928 Number of contributing members at start of annual return year Categories of entries of members for annual return year New members (other than transfers from other schemes) Members restarting contributions at end of section 104 contribution holidays Members restarting contributions after stopping contributions for any other reason Members transferring into scheme from other KiwiSaver schemes Total member entries for annual return year 111,910 614,085 725,995 2,398 17,747 20,145 Deaths 519 2,154 2,673 Permanent emigration exits 321 1,045 1,366 76,513 188,731 265,244 13 42 55 Categories of membership exits for annual return year KiwiSaver end payment date exits Transfers out of scheme into other KiwiSaver schemes Transfers out of scheme into Australian superannuation schemes Other permanent exits 230 1,866 2,096 Invalid enrolments 2,823 839 3,662 Members starting section 104 contribution holidays 7,401 23,820 31,221 Member stopping contributions for other reasons 36,677 210,899 247,576 Total temporary and permanent exits for annual return year 126,895 447,143 574,038 Number of contributing members at end of annual return year 241,802 1,187,572 1,429,374 PAGE 15 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Default members Active Total 31,534 60,269 91,803 Non-contributing members on section 104 contribution holidays Number of members on section 104 contribution holidays at start of annual return year Members starting section 104 contribution holidays 7,401 23,820 31,221 Members ending section 104 contribution holidays and restarting contributions 5,955 14,870 20,825 Members ending section 104 contribution holidays but not restarting contributions for any reason 3,623 5,254 8,877 29,357 63,965 93,322 Number of members on section 104 contribution holidays at end of annual return year Other non-contributing members (not on section 104 contribution holidays) Number of other non-contributing members (not on section 104 contribution holidays) at start of annual return year 173,033 755,587 928,620 Members stopping contributions without section 104 contribution holidays 40,300 216,151 256,451 Members restarting contributions after having stopped contributions without section 104 contribution holidays 30,697 188,076 218,773 Number of other non-contributing members (not on section 104 contribution holidays) at end of annual return year 182,636 783,662 966,298 Total number of members at end of annual return year 453,795 2,035,199 2,488,994 Note: 1. Some providers currently have an inability to differentiate between types of transfers, therefore there are discrepancies in transfers to and transfers from KiwiSaver schemes. There are also timing differences. PAGE 16 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 3 Age and gender profile of members KiwiSaver schemes in force as at 31 March 2015 Default members Age at end of annual return year 17 and under Female Male Unknown gender Total default members 3,441 3,299 259 6,999 18-25 37,836 43,030 1,329 82,195 26-30 31,620 34,131 452 66,203 31-35 26,341 28,390 378 55,109 36-40 23,445 23,844 318 47,607 41-45 25,043 23,873 286 49,202 46-50 22,979 20,949 283 44,211 51-55 21,134 18,608 249 39,991 56-60 16,248 14,311 172 30,731 61-65 10,888 10,368 104 21,360 66-70 4,046 4,138 11 8,195 71-75 409 468 4 881 Unknown age 494 595 22 1,111 223,924 226,004 3,867 453,795 Totals Active members Age at end of annual return year Female Male Unknown gender Total active members 17 and under 173,038 174,693 1,215 348,946 18-25 160,358 161,512 425 322,295 26-30 98,605 98,275 185 197,065 31-35 84,909 81,877 190 166,976 36-40 78,025 73,869 209 152,103 41-45 86,217 79,272 201 165,690 46-50 84,845 78,795 188 163,828 51-55 86,597 80,350 188 167,135 56-60 76,609 71,920 166 148,695 61-65 67,026 63,993 170 131,189 66-70 30,956 31,174 125 62,255 71-75 4,147 4,415 35 8,597 107 155 163 425 1,031,439 1,000,300 3,460 2,035,199 Unknown age Totals PAGE 17 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Total members Age at end of annual return year Female Male Unknown gender Total members 17 and under 176,479 177,992 1,474 355,945 18-25 198,194 204,542 1,754 404,490 26-30 130,225 132,406 637 263,268 31-35 111,250 110,267 568 222,085 36-40 101,470 97,713 527 199,710 41-45 111,260 103,145 487 214,892 46-50 107,824 99,744 471 208,039 51-55 107,731 98,958 437 207,126 56-60 92,857 86,231 338 179,426 61-65 77,914 74,361 274 152,549 66-70 35,002 35,312 136 70,450 71-75 4,556 4,883 39 9,478 601 750 185 1,536 1,255,363 1,226,304 7,327 2,488,994 Unknown age Totals Appendix 4 Profile of new default and other members KiwiSaver schemes in force as at 31 March 2015 Default members allocated to scheme by commissioner under section 51 in annual return year Other new members entering scheme in annual return year (including transfers from other schemes and active choice members) Note: 1. Some providers have included members who have since opted out, while others have not. PAGE 18 Number of members Scheme assets held for those members ($) 75,088 170,320,384 253,136 1,759,295,517 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 5 Summary of non-contributing members (not on section 104 contribution holidays) KiwiSaver schemes in force as at 31 March 2015 Number of default members Scheme assets held for those members ($) Number of active members Scheme assets held for those members ($) Number of non-contributing members (not on section 104 contribution holidays) at start of annual return year 173,033 749,637,843 755,490 2,883,813,249 Number of non-contributing members (not on section 104 contribution holidays) at end of annual return year 182,636 886,735,402 783,662 3,800,106,068 Note: 1. A non-contributing member is a member for whom no contributions have been received in the previous two months or, if the member does not contribute via the IRD, the member has failed to meet their contracted contribution frequency. Appendix 6 Investment fund summary KiwiSaver schemes in force as at 31 March 2015 Number of members in each investment fund Amount in each investment fund ($) Default 453,731 4,066,684,441 Totals 453,731 4,066,684,441 Active default 237,282 2,092,815,496 Conservative 600,024 5,351,818,937 Balanced 525,846 6,972,726,979 Growth 816,891 8,056,841,145 Investment funds Single sector funds Cash 642,763 1,099,589,443 Shares 54,395 354,643,318 Fixed interest 28,113 135,702,809 6,241 35,101,361 Property Socially responsible Other Totals 7,193 52,737,619 26,426 255,885,564 2,945,174 24,407,862,670 Note: 1. The statistical returns are unaudited and may not include all transactions. 2. Some members will be invested in more than one investment fund. PAGE 19 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 7 Switches out of default investment product into other investment funds KiwiSaver schemes in force as at 31 March 2015 Switches in annual return year Switches out of default investment product under instrument of appointment Number of members out of default investment product Number of members into others 26,392 Amount ($) out of default investment product Amount ($) into others 395,231,699 Switches into other investment funds Conservative 9,108 165,719,365 10,209 135,608,797 9,135 85,856,298 Cash 561 4,811,641 Shares 865 2,991,253 Fixed interest 1 1,415 Property 0 0 168 243,051 Balanced Growth Single sector funds Other Total of switches into other investment funds PAGE 20 26,392 30,047 395,231,699 395,231,819 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Switches between investment funds KiwiSaver schemes in force as at 31 March 2015 Switches into investment funds in annual return year Investment funds Number of switches Amount ($) Switches out of investment funds in annual return year Number of switches Amount ($) Net change in amounts ($) Active default 4,752 70,829,715 9,522 114,257,384 -43,427,669 Conservative 11,617 174,229,245 19,162 230,681,595 -56,452,349 Balanced 25,739 352,277,511 21,421 284,591,039 67,686,472 Growth 26,085 262,640,335 18,997 249,562,792 13,077,543 Cash 6,450 78,394,982 4,932 56,324,766 22,070,216 Shares Single sector funds 4,899 25,326,603 4,216 22,195,854 3,130,749 Fixed interest 568 3,419,718 703 8,075,222 -4,655,505 Property 805 2,828,413 1,529 4,091,147 -1,262,734 Socially responsible 228 1,844,715 322 3,327,588 -1,482,873 Other 286 3,619,507 228 2,552,239 1,067,268 81,429 975,410,743 81,032 975,659,626 -248,882 Total of switches between funds PAGE 21 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 8 Profile of switches between investment funds KiwiSaver schemes in force as at 31 March 2015 How many switches between investment funds made in annual return year 1 switch Number of members who made those switches Default Active 26,355 62,509 2 switches 2,991 3 switches 600 4 switches 204 5 switches or more 263 Appendix 9 Analysis according to size of scheme assets KiwiSaver schemes in force as at 31 March 2015 Number of schemes 2015 Total assets 2015 $M Total membership 2015 Under $2m 4 5.2 660 $2m to under $10m 8 42.4 2,124 $10m to under $25m - - - $25m to under $50m 3 106.5 5,405 $50m to under $100m 3 189.1 15,257 $100m to under $200m 5 665.8 36,152 Assets grouping $200m to under $1,000m 6 2,930.7 236,776 $1,000m and over 10 24,534.9 2,192,620 Total 39 28,474.6 2,488,994 Note: 1. The data has been obtained from statistical returns made by the trustees of KiwiSaver schemes registered under the KiwiSaver Act 2006. 2. Some totals may not add exactly, due to rounding. PAGE 22 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Appendix 10 Analysis by nature of scheme KiwiSaver schemes in force as at 31 March 2015 Total membership 2015 Number of schemes 2015 Total assets 2015 $M 4,067 453,795 Retail (active choice) 27 23,802 2,010,659 Restricted schemes 12 606 24,540 Total 39 28,475 2,488,994 Nature of scheme Default schemes (nine) Note: 1. Default schemes statistics are only in respect of members and assets in the default investment fund option 2. Retail (active choice) total assets and total membership figures include that portion of the default schemes where members have actively chosen to participate. 3. The data has been obtained from statistical returns made by the trustees of KiwiSaver schemes registered under the KiwiSaver Act 2006 to the members and beneficiaries of those schemes. 4. Some totals may not add exactly, due to rounding. Appendix 11 Analysis according to nature of scheme and size of scheme assets KiwiSaver schemes in force as at 31 March 2015 NUMBER OF SCHEMES Assets grouping Retail (see note 1) Restricted schemes Total Under $10m 3 9 12 $10m to under $50m 2 1 3 $50m to under $100m 3 - 3 $100m to under $200m 4 1 5 $200m to under $1,000m 5 1 6 $1,000m and over 10 - 10 Total, all groups 27 12 39 PAGE 23 FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT TOTAL ASSETS ($ millions) Assets grouping Default Retail Restricted schemes Total 7.05 8.22 39.36 54.63 35.68 79.67 26.84 142.19 $50m to under $100m - 189.09 - 189.09 $100m to under $200m - 514.27 151.30 665.57 $200m to under $1,000m 2,928.41 3,976.01 388.27 7,292.69 $1,000m and over 1,095.55 19,034.63 - 20,130.18 Total, all groups 4,066.69 23,801.89 605.77 28,474.35 Default Retail Restricted schemes Total 2,849 1,027 1,757 5,633 13,975 3,851 1,554 19,380 $50m to under $100m - 15,257 - 15,257 $100m to under $200m - 28,709 7,443 36,152 $200m to under $1,000m 311,023 290,759 13,786 615,568 $1,000m and over 125,948 1,671,056 - 1,797,004 Total, all groups 453,795 2,010,659 24,540 2,488,994 Under $10m $10m to under $50m TOTAL MEMBERSHIP Assets grouping Under $10m $10m to under $50m Note: 1. Default schemes are included. 2. Default scheme statistics are only in respect of members and assets in the default investment fund option. 3. Retail schemes’ total assets and total membership figures include the portion of the default schemes where members have actively chosen to participate. PAGE 24 4. The data has been obtained from statistical returns made by the trustees of KiwiSaver schemes registered under the KiwiSaver Act 2006 relating to the members and beneficiaries of those schemes. 5. Some totals may not add exactly, due to rounding. FINANCIAL MARKETS AUTHORITY KIWISAVER – ANNUAL REPORT Glossary Active A scheme or fund a member has chosen to join. Complying superannuation funds A registered superannuation scheme whose rules effectively mirror the rules for KiwiSaver schemes as specified in Schedule 28 of the Income Tax Act 2007. A register of complying superannuation funds is published on the FMA website. Default schemes Schemes in which members are automatically enrolled if they don’t choose their own scheme. There are currently nine default schemes (AMP, ANZ Default, ASB, BNZ, Grosvenor, Kiwi Wealth, Mercer, Fisher Funds TWO and Westpac). Employer-preferred schemes An employer can notify the Commissioner of Inland Revenue that it has chosen a preferred KiwiSaver scheme in which all of its eligible employees will be automatically enrolled unless they choose to join another scheme. Exempt employers Employers approved by the FMA as not having to automatically enrol new employees in KiwiSaver. A register of exempt employers is published on the FMA website. FMC Act The Financial Markets Conduct Act 2013 Registered schemes Schemes defined under the Superannuation Schemes Act 1989 or registered under the Financial Markets Conduct Act 2013. Restricted schemes KiwiSaver schemes that are only open to specific groups of people employed in the same company or industry, or another defined group, and may include immediate family members or dependents. Retail schemes KiwiSaver schemes that are open to members of the public. Standard contributions Contributions defined in section 64 of the KiwiSaver Act 2006. Non-contributors Members who have not made a contribution in the previous two months or, if they do not contribute via the IRD, they have failed to make their contracted payments. PAGE 25 MA FINANCIAL MARKETS AUTHORITY TE MANA TATAI HOKOHOKO NEW ZEALAND