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There were 280 attendees from 60 firms, and it was an engaging agenda providing plenty of insights of relevance for our NZ retirement savings journey, particularly from a decumulation perspective.
Notwithstanding our local focus on helping Kiwi’s maximise their ability to grow contribution levels over time, the 2025 KiwiSaver annual report noted that circa 512,000 members are in the 56–65 age group approaching “retirement” and a further 170,000 members in the 66–75 year age group are, theoretically at least, in the midst of navigating retirement’s financial challenges.
In the Australian market, the numbers are much bigger of course, but many of the challenges faced by members when they transition into retirement and decumulation I think would be shared irrespective of what side of the Tasman you may be on.
The conference recognised that there is an increasingly urgent need for innovation in retirement solutions, driven by demographic, technological, and economic changes.
The delivery of holistic, personalised advice for decumulation strategies, enabled by appropriate regulatory settings, and thoughtful investment approaches, is needed to provide retirees with sustainable income and give them the confidence and tools to navigate retirement spending.
How the industry thinks about “product” is one area where innovation is needed. Retirement solutions are quite different to accumulation solutions. Many funds simply offer to members a mirror of their accumulation product offer. Product features such as downside risk mitigation are increasingly being sought along with solutions that provide a level of income stability, liquidity and security.
Many retirees worry about outliving their savings and maintaining purchasing power. A US survey noted 66% of current retirees were worried they would outlive their savings (up 10%) on the prior year. They are seeking a dependable income in a volatile, stressed market environment.
In Australia, many are passing away with balances not significantly lower than the amount they retired with. Financial advice needs to support confidence and income in retirement – the language and positioning with clients’ needs to shift the narrative from one centred on growing and protecting my “nest egg” to “what does my balance give me at retirement”, i.e. an income...
Retirement is a personal journey – taking a cohort-led approach to engaging clients during accumulation may work satisfactorily, but in decumulation, “cohort of one” approaches are needed.
Holistic advice (i.e. advice that takes account of a client’s wider financial and family circumstances) is required. Technology, tools and AI can support this, but the quality of the advice will be limited to the nature of information ingested by that technology and tooling. Combining internal and external data, and leveraging AI, should enable advisers to be able to provide powerful insights and personalised guidance.
In time the tools will manage the complexity, but it will be the role of humans to provide confidence and comfort.
Successful outcomes should be measured by member confidence and well-being, not just fund performance.
How confident are clients that their funds will last their lifetime, and that they can live the lifestyle they want to live? They will need help to be able to confidently answer these questions.
It is encouraging to see decumulation-related calculators now on the Sorted website, and recognition of the challenges Kiwis will face in this area in the recently released Review of Retirement Income Policies 2025. Decumulation is now moving onto our local agenda, and we can learn from other markets who are further advanced in tackling the challenges.
