Many features of KiwiSaver deter Māori from joining. Brigette Arnold, of Private Wealth Advisers, explains how iwi are filling the investment and savings gap.
The Māori economy has grown to over NZ$50 billion as Māori entities have accumulated more than NZ$1.5 billion of assets and investments under management.
Yet despite this growing wealth, the number of Māori participating in KiwiSaver is far fewer than non-Māori.
Asking why, a Crown Māori Economic Growth Partnership, ‘He kai kei aku ringa’, report found a ‘lack of fit’ between Māori saving needs and KiwiSaver’s features.
So, Māori entities are responding by looking for more meaningful initiatives for their members and offering support around savings.
Looking for broader solutions
KiwiSaver is primarily designed to cater for the relationship between employers and employees. It’s narrow.
Yet Māori are looking for broader, more inclusive solutions that incorporate tikanga Māori and Māori cultural values concerning wealth, urging some iwi to develop alternative savings solutions.
“Although many Māori whānau are very rich in relational and cultural capital ... Māori are less likely to own their own home, tend to have less personal savings, and are less likely to enrol in KiwiSaver,” says Carla Houkamau, Associate Dean of Māori and Pacific Development, University of Auckland Business School.
But it’s not just household economic wealth that’s a barrier. Certain KiwiSaver features are not favourable to Māori. One is 65 being the age of entitlement to access savings, because Māori have a lower life expectancy.
Many Māori may not live to 65 to enjoy their retirement savings, and this will get worse if the age of eligibility increases.
Another deterrent is the limited reasons for which KiwiSaver money can be withdrawn – withdrawals supporting education are excluded, for example.
Whānau are looking for solutions that have the flexibility to cater for a range of individual situations, not just the employee-employer relationship.
What’s out there?
Two examples of alternative saving schemes are Ngāi Tahu’s Whai Rawa Savings Programme and Ngāti Whatua’s newly established Toi Tupu savings and investment scheme.
Whai Rawa was set up by Te Rūnanga o Ngāi Tahu in 2006 to help grow the long-term wealth of Ngāi Tahu whānau.
It’s a portfolio investment entity (PIE) designed to encourage savings for first-home purchase, retirement, or tertiary education.
Funds may be withdrawn for retirement from age 55. Whai Rawa offers matched savings for its members (both adults and children) and provides Kaumātua Grants for those aged 65 and older.
Whai Rawa also has a strong focus on developing financial literacy, and offers a range of educational tools for its members.
Whai Rawa has more than 25,000 members and more than NZ$72 million funds under management.
The scheme has been particularly successful in enrolling children, and in encouraging a proportion of Ngāi Tahu to participate in mainstream KiwiSaver.
“Based on Ngāi Tahu surveys and census data [State of the Nation], Ngāi Tahu whānau have taken up KiwiSaver at the same rate as the total population,” says Fiona Pimm, Whai Rawa chair.
Whai Rawa recently ran an Expression of Interest (EOI) exercise, considering a possible KiwiSaver option for its members. It has decided not to proceed, but intends to revisit this later.
Toi Tupu is a savings and investment scheme, accompanied by a financial capability-building programme, set up by Ngāti Whātua Orakei.
The programme is aimed at encouraging a savings and investment culture within the hapū.
An interest-earning term deposit is created for each member who enrols, and the money is invested by the Ngāti Whātua Ōrākei group of companies in their business activities.
Costs high for small iwi
The size of a Māori entity is a factor for iwi considering setting up their own savings schemes.
Te Rūnanga o Ngāi Tahu and Ngāti Whātua Orakei both administer savings schemes at their cost, which is manageable due to their size – Ngāi Tahu’s is NZ$1.7 million and Ngāti Whātua Orakei’s NZ$1.1 billion.
For small-to-medium sized Māori entities, the administrative costs, including regulatory and compliance expense, would be more prohibitive.
One way forward is the sharing of back-office infrastructure, expertise, and administrative and regulatory support for iwi and Māori entities wishing to develop similar schemes.
There’s also merit in government support for smaller iwi-managed savings schemes.
Making changes to KiwiSaver legislation so it may become a better ‘fit’ for Māori may make it more appealing and lead to more Māori joining.
First published 4 December 2018
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