63% of New Zealanders say they are not saving enough

There is widespread concern among New Zealanders over how much income they will have in retirement.

Nearly 80% think their savings will run out before the end of their lives.

Only one third of adults feel they will have enough income from all sources in retirement to cover basic costs and only 10% believe a government pension alone will be enough to cover basic costs.

These are some of the preliminary findings of new nationwide research conducted for the country’s investment and savings industry which will be released in coming weeks.

The need to address significant concerns like these and re-establish trust in the financial sector is one of the reasons behind the formation of a new Financial Services Council (FSC), being launched in Wellington on March 13.

The former Insurance, Savings and Investment Association (ISI) decided this is the time for a major change in direction and emphasis and has moved to establish a new more focussed organisation which represents the investment and life insurance companies in New Zealand, now managing more than $60 billion in savings and provide financial services to more than 1,800,000 New Zealand investors and policyholders.

The formal launch of the Financial Services Council will occur in Wellington at a function on March 13, to which political leaders, policy makers and people in the finance industry have been invited.

The new organisation has an independent chair, Rt. Hon Dame Jenny Shipley.

Dame Jenny says the new organisation will have increasing and protecting the wealth of New Zealanders as a primary purpose.

The new FSC is funding major research projects on issues like savings for retirement income security and under-insurance with a view to producing practicable long-term policy solutions and we look forward to working with Government, other private sector companies, organisations and institutions and political parties as we find sustainable solutions to these challenging issues.

The FSC’s Chief Executive, Peter Neilson, says the new organisation plans to start releasing its research and policy options on retirement income security during the next two months.

These will arise from significant reports prepared in association with independent researchers and funded by the investment and savings industry.

The work is aimed at finding ways to help New Zealanders effectively avoid a coming retirement funding crisis. More people are now retiring and living much longer in retirement.

“The industry is looking for solutions that allow New Zealanders to continue to retire at 65 if that is their choice.”

Many New Zealanders are not saving enough to live comfortably through a much longer retirement than experienced by earlier generations and we need to find solutions to recognise this.

As part of our research project Mr Neilson said a December, 2011, FSC-commissioned Horizon Research survey of 2,558 adults finds:

Only one-third of New Zealand adults feel they will have enough retirement income to cover their basic costs.
Only 10.1% believe that a government pension like New Zealand Superannuation alone will be enough to live comfortably.
62.9% of people say they are not currently saving enough to retire on a comfortable income.
61.5% of current retirees say that their income is not as much as they expected before retirement.
Nearly 80% of respondents had some concern that their savings would run out before the end of their lives.

Dame Jenny says:  “A more broadly based pan-sector organisation is needed now to help provide answers on building New Zealanders’ net worth in a nation where huge numbers are worried and the costs to Government can’t be funded without future tax rises. We think the FSC will come through with some very practicable and appealing answers to help New Zealanders build their wealth and protect their wealth to live more secure lives.”