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KiwiSaver and why 'blah, blah, blah' can end in tears

Posted to Retirement Section on 24-10-2017

By David Boyle

"Oh, help!" said Pooh. "I'd better go back."
"Oh, bother!" said Pooh. "I shall have to go on."

Remember when Pooh Bear got stuck in the tunnel to Rabbit’s home and had to stay there for a week until he was thin enough to get out? That was me once.

KiwiSaver members get stuck as well – and the consequences can be a lot more damaging than my tunnel experience. More on that later.

I was ten-years-old and had just finished playing rugby with my friends. Dad had taken me to the park and it must have been a chilly day because I was wrapped up warm in my thick, green duffel coat.

The playground was known in Rakaia for its concrete tunnel maze – a series of concrete pipes that had been joined together for children to crawl through and which, unbeknownst to me, were of varying sizes.

“You’d better take your coat off David,” said Dad.

“Blah, blah, blah,” was all I heard as I raced off to join the kids already disappearing up the nearest dark hole. I followed them bravely, not exactly loving the experience of crawling in a confined space where I could barely see in front of me. I think the young guys call it FOMO these days – the fear of missing out.

When I got to the middle, where the tunnels intersected, I didn’t really care about FOMO, the only thing on my mind was getting out again, so I picked a tunnel, any tunnel and headed towards the light.

Except this one was smaller than the first and it didn’t take long to find out as I came to an abrupt halt. My duffel coat was too bulky and I was having trouble moving. Panic rising, I inched forward, desperate to reach the wide-open space outside.

But it was no good, I couldn’t move. I started to freak out a little then tried to retrace my steps backwards. But that didn’t work either. I was stuck.

I did the only thing left to me: screamed for help (and maybe cried just a little).

After what seemed an eternity, but was probably only half a minute, I could feel hands on my ankles and I was being yanked unceremoniously backwards, then guided down a bigger tunnel and out to freedom.

My dad was waiting, trying to hide a small smile as he surveyed my terrified, tear-stained face. “I told you to take your coat off,” he said.

He was right, he’d given the message, but I hadn’t heard it. To be fair, he could have been a bit more compelling, explained why my coat was a bad idea and done his best to make sure I was listening. Maybe even taken the damn thing off me.

I learned my lesson the hard way. He hadn’t communicated very well and I hadn’t paid any attention.

Back to KiwiSaver. Default providers are required to communicate with their members. Some try very hard to keep things simple, but interesting and appealing, so that we take note and, more importantly, act. Others, not so much.

Basic messages, like thinking about whether you are investing in the best fund for your circumstances, and whether you’ve saved enough to get the $521 government contribution each year, are not getting through to too many people.

446,500 people are still in conservative default funds, where they may be missing out on potential earnings. The Financial Markets Authority has told providers they need to do more to educate their members and they are spot on.

We need to make sure New Zealanders understand more about the fund they are in, but also their contribution rate: will 3% get them the retirement they want? For many people, the answer would be no if they only stopped to ask the question. But they’re not, putting themselves in danger of finding out too late, when they’re close to retirement and have little time to do much about it.

It’s true that we lead busy lives and are often in such a rush to do other things (like me racing to catch up with the boys in the tunnel) that we’re not great at paying attention. But if the messages were clearer, interesting and easy to grasp, then they would be harder to ignore.

The onus would then be on each of us to pay attention and take responsibility for what happens next, hopefully acting on the information.

We’re planning to do our bit at CFFC over the next 12 months to make a song and dance about this stuff and we’re hoping lots of providers will join us.

In the words of Pooh Bear: “It is more fun to talk with someone who doesn't use long, difficult words but rather short, easy words like "What about lunch?”

david boyle childhood photo
David Boyle, 10 years old.

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