James Fuller: Hnry CEO on the number of self-employed people opting out of KiwiSaver

Self-employed people are opting out of KiwiSaver, putting their retirements at risk. 

A new report from the Retirement Commission and accounting firm Hnry's reveals only 44% of self-employed people actively contribute compared to 78% of employees.  

It shows 41% of self-employed workers don't get any government contribution.  

Hnry CEO James Fuller told Ryan Bridge when the Government halved KiwiSaver contributions in this year's Budget, many decided to put their money elsewhere. 

He says self-employed people have started putting their money into high-risk, short-term investments, meaning they won't have enough retirement savings. 

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Episode Transcript

Speaker 1 (00:00):
Self employed people. Bit of a warning for you this
morning from the Retirement Commission self employed people investing less
than half the amount into their retirement than that of employees,
meaning they could miss out on your government contributions if
it's Keiwi saver. James Fuller is the Henry CEO and
joins me. Now, Hey, James, Hey, good morning. This is
not surprising, right because it's optional.

Speaker 2 (00:23):
It is. It's not surprising. But I think with the
recent changes in the twenty twenty five budget, the problem
that we're going to face is that fewer and fewer
self employed are going to contribute to kiisaver now that
the government contribution has been half.

Speaker 1 (00:36):
Do you think it's an education thing or a cost
of living thing.

Speaker 2 (00:41):
I think it's a combination of the two. I think
self are fully aware that they can voluntarily pay into
their SEV saver, but I think the challenge becomes that
there's no incentive for them to do so so. Over
the last three years, eighty nine percent of government contributions
towards kiisaver have gone to salaries employees and only seven
percent have gone to the self and deployed. And that's

(01:01):
very stark. In contrast, to the fact that there are
twenty percent of the workforce of self employed. So it's
a real disparity there from what the government is doing.

Speaker 1 (01:09):
When someone because on your app, when someone opts out
of key we Saver, do you try and tell say
to them, hey, don't do that. Here's the potential implications
of that.

Speaker 2 (01:21):
We provide a lot of education to our customers. We
don't give them advice around these sorts of things, but
we do encourage them to get financial advice. I think
the key thing though, is that a lot of people
are opting out simply because the government is not contributing
as much as they were. So now thatment government contribution
has been halved, we've seen a large number of self

(01:43):
employed people decide, actually, I'm going to try and put
my money elsewhere. And the danger there is that they
start putting their money into maybe sort of higher risk,
shorter term investments, and that means that they won't have
enough retirement savings. And you know, it's a bit of
a short term a stress strategy from the government because
long we're potentially creating a generation of soul traders who
are going to become a burden on the state when

(02:05):
they come to retirement age because they won't have any savings.

Speaker 1 (02:08):
Or they could. I mean, the soul traders are often
quite smart people and think for themselves, and you know,
they might have other alternative investment options that I think,
as you say, this one's not giving me what it
used to do, I'm going to move it over here
and it's a long term thing and I'm going to
make more money out of it.

Speaker 2 (02:26):
Yeah, yeah, absolutely right. Soul traders are incredibly resilient about
this kind of stuff. You know, after the KIWISA, the
most common place for them to put their money is
specialist savings accounts, which is sort of thirty two and
a half percent of them are putting money aside in savings.
There the challenge with that we're seeing interest rates dropping,
so the value of those specialist savings accounts is dropic
and doesn't provide some of the financial stability longer term

(02:48):
that things like que favor do. So we should really
be encouraging everyone across New Zealand to be paying into
their quis favor. And actually sometimes it's down to the
government to actually proviy a level of as you said,
education level of centers to actually get off and twelve
people back onto the Kiwisaver Train.

Speaker 1 (03:04):
James, appreciate your time. Thanks, thanks so much for coming
on the show.

Speaker 2 (03:07):
James.

Speaker 1 (03:07):
Follow the Henry CEO for more.

Speaker 2 (03:10):
From Early Edition with Ryan Bridge.

Speaker 1 (03:12):
Listen live to news Talks.

Speaker 2 (03:14):
It'd be from five am weekdays, or follow the podcast
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