retirement.org.nz

The Retirement Commission's vision is that New Zealanders are financially sorted.¹ There are two high level goals for New Zealand society that we seek to achieve both through our own work, and through working with many other organisations, groups and individuals. These are:

• New Zealanders are financially well prepared for retirement.
• New Zealanders living in retirement villages have informed choice.

Outcomes

We identify four contributing outcomes that the Commission's work is directly aimed at achieving, and which contribute to these higher level goals. The four contributing outcomes of the Commission are:

1. New Zealanders are well educated in financial matters and can make informed financial decisions throughout their lives.
2. The financial services sector is trusted.
3. Government’s retirement income policies are effective and stable.
4. All retirement villages meet societal expectations and current quality standards.

Outcome measures

We have found it challenging to identify useful, quantifiable and attributable outcome measures that can be used to judge future performance.  So many other factors influence outcomes that to suggest that the Commission's activities alone have resulted in a particular outcome is not only misleading, but may take credit (or blame) for the work of many other individuals or agencies.  Nevertheless, we have described the type of measures we will use ('How we will measure results') and, where possible, included some current numeric indicators and the change we expect.

In her April 2007 paper², former Director of the UK Pensions Policy Unit Alison O'Connell reviews what is being done around the world to measure the effectiveness of many different types of financial education and begins to develop a framework for doing better evaluation. This research will help us identify sensible outcome measures for our next Statement of Intent.

The 2007 review of retirement income policies, and the evaluation programme for KiwiSaver, will also give us an opportunity to consider new outcome measures.

Description:

This describes a population that has the necessary information and skills to help them make sound decisions about planning and managing their personal finances throughout their lives. Personal financial education (PFE) includes providing information and decision-making tools, and increasing an individual's skills and understanding of personal financial issues.

Key impacts sought:

Increased information and skill levels will shape both financial attitudes and behaviours.   We aim to help people become more aware of financial issues and their significance and therefore able to make more confident and effective financial choices. People will have the ability to assess their personal financial situation and make quality decisions about their involvement in KiwiSaver or other savings options as a result of the Commission's workplace financial education programme.

Activities:

The main activities are education based.

The Commission’s Sorted programme with its website and printed information are key strategies. The Sorted website’s practical content and calculators gives users the opportunity to develop their financial plans and see the consequences of various courses of action.  A new version of the site launched in May 2007 provides the base for additional functionality and personalisation that will be built on in 2007/08.

The three-year workplace financial education programme uses an enhanced Sorted website, printed educational information, and workplace and public personal finance seminars. The programme will be actively promoted through communication media and stakeholder activity.

While the workplace financial education programme has a generic purpose, it is intended to support the introduction of KiwiSaver in July 2007 by enabling people to make quality decisions about whether or not to participate in KiwiSaver, or other savings options, within the context of their wider personal financial situation.

The programme includes development and delivery of education and information programmes that improve workers' understanding of lifetime financial management; improve workers' knowledge of how to go about financial planning; encourage workers to consider saving options such as KiwiSaver offered through the workplace and encourage those who can to make voluntary savings; and encourage employers and others to provide financial education in the workplace.

Main activities of the workplace financial education programme are:

The Sorted KiwiSaver Decision Guide, available in various formats:

• Online, featuring various calculators to help make an informed KiwiSaver decision.
• Brochures, available in various languages.
• Posters, featuring a summary of the Sorted KiwiSaver Decision Guide.
• KiwiSaver decision-making seminar content (including facilitators guide and participants handbook), designed for all literacy levels.
• 'Sort Me', an online personal financial check-up, which New Zealanders can use to assess their financial situation by answering simple multi-choice questions.

Communication with low financially literate Kiwis ('at risk' group).

In this programme and other educational initiatives we need to work effectively with other stakeholders who have interests in promoting New Zealanders' understanding of their personal financial position. 

We place particular priority on the need to engage with young people early in their lives when they are forming their attitudes to personal financial management. We have developed information for inclusion in the school curriculum.

A new activity for 2007/08 is the development of a national strategy for financial education – not just for the Retirement Commission but for New Zealand as a whole. 

How we will measure results:

The major measures of impact will be changes in attitudes, levels of knowledge and action taken as a result of accessing our education programmes and information. These will be measured through the Financial Knowledge Survey that the Commission conducts in association with the ANZ, together with other benchmarked surveys and analyses. We are also looking at developing longitudinal measures of our education programme.

Other indicators of interest levels in personal financial management will be statistical measures of the use of Sorted calculators and information and access to the Commission’s website and printed information.

Key measures³ to be maintained are:

• Revisiting Sorted (mentioned by 60-70% of those responding to the annual Email Action Taken survey)
  - mentioned by 68% in 2006 survey.
• Making some new financial goals (45-55% mention)
  - mentioned by 46% in 2006 survey.
• Savings plan actions (starting or changing) accounts for 55-65% of mentions
  - mentioned by 58% in 2006 survey.
• There is 70-80% mention of actions relating to financial plans (primarily respondents assessing their financial situation and/or updating a plan)
  - mentioned by 82% in 2006 survey.
• 40-50% mention actions in relation to making or reviewing budgets
  - mentioned by 41% in 2006 survey.
• 45-55% mention debt reduction (either starting or changing a debt reduction plan)
  - mentioned by 54% in 2006 survey.

Key financial knowledge measures⁴ are:

• Maintain 83% knowledge that NZ Superannuation is paid at 65 years.
• Increase knowledge that NZ Superannuation is not asset tested from 45% to 50%.
• Increase knowledge that NZ Superannuation is not income tested from 38% to 45%.

The workplace financial education programme will also be evaluated to consider levels of awareness, uptake, effectiveness and cost-effectiveness. 

• KiwiSaver evaluation to show at least 50% of employees report that they had enough information to make an informed decision about workplace savings, as measured by 12 and 24 months after July 2007.
• Increase awareness of the need for financial knowledge (weighted towards the less financially literate and ‘at risk’ groups).
• Increase New Zealanders’ desire to seek relevant information on personal financial knowledge.
• Increase the levels of financial knowledge of all employees, as measured by the next scheduled financial knowledge survey (2010).
• Low financially literacy project - to reduce the size of the lowest knowledge group from 33% to 25% by 2010.
• Increase employers’ awareness of the need for improved employee financial knowledge as a benefit to their organisation and its staff.
• That the stakeholders approached by the Retirement Commission pass on Sorted resources to their members and audiences (measured internally via direct follow up). Base data will be collected over the year as a benchmark to measure increasing levels of uptake.

Description:

A financial sector that is trusted by the public and whose products, services and charges can be clearly understood.

Key impacts sought:

These cover both the performance of the industry and New Zealanders’ increasing levels of trust in the industry. The industry is trustworthy when it meets the expectations of clients for the provision of products and services and can assure the quality of these. 

New Zealanders dealing with a trustworthy financial sector will find the experience transparent and straightforward. Transparency extends to disclosing to clients the actual costs of products and services and any other relevant factors that could affect a client’s decision – such as an adviser’s financial interests that could in any possible way be seen to be in conflict with the services being offered.

Activities:

The Commission will promote research and debate about ways of improving trust in, and the efficiency of, the retail savings industry. We will also promote the adoption and use of standard forms of disclosure for financial advisers about the actual costs of their services and any related interests. We will work with the sector and other government agencies to achieve these goals.

How we will measure results:

Evidence of impacts will be provided by various indicators such as the development and use of improved forms of disclosure and industry commitments to improved training processes and standards and to standardised codes of practice and conduct. Public surveys will provide a measure of the public’s perception of the industry and its practices.

We would like to see an increase of at least 5 percentage points over the next 3 years in the 32% of adult New Zealanders who agree or strongly agree with the statement 'I trust most financial advisers⁵'. 

Monitoring media commentary on the industry will also provide an indicator of trust and public perception.

Description:

The wide range of government policies that have implications for New Zealanders’ financial wellbeing in retirement will be effective in achieving the intended results, and will do so efficiently and fairly. Overall policy directions will be generally stable, and will form a reliable retirement income framework on which individuals may confidently base their personal financial retirement plans.

Key impacts sought:

The main impacts sought are that New Zealanders will be able to plan financially for their future with reasonable certainty about the long term intentions of government and that the state funded retirement income will provide a basic income for older people.

Activities:

The Commission will provide information and education that describes the purpose and effects of relevant legislation. Through our research and evaluation work and the 2007 review of retirement income policies, we will identify areas of policy that work well or that may need further consideration, development or adjustment. The Retirement Commissioner will consult with a wide range of stakeholders in the review of policy.

The 2007 review will itself be the main activity for this outcome in 2007/08. As well as looking at trends and future developments likely to affect the provision of retirement income, the review will also include independent research on the effectiveness of financial education available to and used by New Zealanders.

How we will measure results:

The effectiveness of government policies in achieving intended results will be monitored and, as necessary, reported on. The extent to which the Retirement Commissioner’s advice to the government and its agencies is acted on will be a measure of our impact on retirement policies and agencies’ practices. Other proxy measures of impact will be the amount of research and analysis work undertaken on the operation of current legislation and government policies and of advice prepared.

This is a difficult area for which to develop standards and measures that can reasonably be used to judge future performance.  Following the 2007 review we will be in a better position to develop measures and standards for the effectiveness of government retirement income policies. The Retirement Commission will also be working with officials on measuring the effectiveness of the Government’s KiwiSaver savings initiative.

Description:

Retirement villages will comply with all relevant legislation and meet both the expectations of society and their residents about the overall fitness of villages’ accommodation, facilities and services in meeting contemporary standards of good quality retirement living.

Key impacts sought:

The retirement villages sector will be operating well if all villages meet the legal requirements for performance as set out both in the Retirement Villages Act 2003, associated regulations and Code of Practice and more generally, the expectations of residents. Intending residents will be able to make informed choices, and residents understand their rights, as a result of the Commission’s education programme.

Activities:

• The Commission will maintain and oversee members of disputes panels and provide information on dispute resolution.
• The focus of our education work will be to ensure that residents, intending residents, their families and advisers are well informed about all issues involved with entering, living in and leaving a retirement village.
• The Commission will also provide some information to village operators concerning their responsibilities.
• We will monitor the effects of the Act, regulations and Code of Practice and provide advice to the Minister when requested or required.

How we will measure results:

Measures will be the levels of access and use of our information and education resources about villages. Other measures will include the nature, numbers and trends in complaints and disputes about retirement villages. A follow-up survey of residents and operators (by June 2008) will measure customer satisfaction, and how well the Act is achieving its purpose.

NOTES

1. Our vision and goals complement the government social sector agencies' common outcome of an inclusive New Zealand where all people are able to participate in the social and economic life of their communities.
2. 'Measuring the effectiveness of financial education', Alison O'Connell, April 2007.
3. 'Email Action Taken Survey', September 2002, AC Nielsen. These measures will be reviewed once the 2007 survey data is available.
4. ANZ-Retirement Commission Financial Knowledge Survey 2005, Colmar Brunton. 
5. 'Sorted, Financial and Retirement Planning in 2005', AC Nielsen.