Looking closer at KiwiSaver options

• Author: OPINION Shelley Hanna
• Published date: 30 September 2022
• Publication title: Horowhenua Chronicle

AIt depends what you mean by “safer”. Every investment involves risk. A typical product disclosure statement for a KiwiSaver scheme will describe risks such as investment returns risk, market risk, currency risk, credit risk, counterparty risk, interest rate risk, key person risk, liquidity risk, asset allocation risk and derivative risk

Many of these risks apply to all investments, not just KiwiSaver. You can read up more on these risks by finding the product disclosure statement on your provider’s website.

Apart from investment risk, there is also the risk of cyber crime. According to the Financial Markets Authority, in just the first quarter of this year, 167 cyber incidents affecting New Zealand organisations were reported, of which over half targeted the finance and insurance sector. It is the role of the FMA to ensure the sector meets the minimum standards of their licences when it comes to having IT systems that are secure and reliable. Firms should be continually investing in cyber resilience, and recognising it as a necessary fixed cost, equivalent to insurance against events that might cost them much more — including their reputation. Every provider is expected to have a response and recovery plan, so they know how to act in the event of an attack and how to resume essential services quickly.

When comparing banks and investment companies, it is worth mentioning the importance of economies of scale. The rate of increase of funds in KiwiSaver — now over...