retirement.org.nz

The Retirement Commission's vision is that New Zealanders are financially sorted.

Goals

There are three high level elements 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:

• Creating a financially educated population.
• Actively supporting the development of a trustworthy financial services sector.
• Contributing to stable effective government policy.

These goals are vital to New Zealand's retirement income framework and to creating personal financial wellbeing for New Zealanders so they are adequately provided for in retirement. It is important to have stable and effective policies for retirement income so New Zealanders can plan financially for their retirement with some certainty that the policy is not going to be significantly and unfavourably changed without due notice. For those who are close to retirement or retired, there is little opportunity to respond to such changes.

The Retirement Commissioner is also responsible for monitoring the effects of the Retirement Villages Act 2003 and administering the disputes process. The goal we seek to achieve in this area is that the interests of residents and intending residents of retirement villages are protected.

Outcomes

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

1. New Zealanders are better educated in financial matters and can make more informed financial decisions throughout their lives.
2. New Zealanders have more trust in the financial services sector.
3. Government's retirement income policies remain effective and stable.

The Commission's work in the retirement villages sector seeks to contribute to the outcome that 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 to judge future performance. As many other factors influence outcomes, to suggest that the Commission's activities alone have resulted in a particular outcome would be misleading and may take credit (or blame) for the work of other individuals or agencies. Nevertheless, to help show the outcomes of the Commission's activities, we have described the type of measures we will use and, where possible, included some current numeric indicators and the expected change.

Outcome 1: New Zealanders are better educated in financial matters and can make more informed financial decisions throughout their lives

Description:

This describes a population that has the necessary information and skills to help people make sound decisions about planning and managing their personal finances throughout their lives. Personal financial education 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 and information based.

The Commission's Sorted programme with its website, printed booklets and seminar modules are key resources. The Sorted website's practical content and calculators give users the opportunity to develop their financial plans and see the implications of various courses of action. (The Retirement Commission expects an average of 130,000 to 150,000 visitors to the sorted.org.nz and m.sorted.org.nz websites each month and an average of 25,000 to 30,000 booklets to be distributed each month).

Up-to-date information is being provided through sorted.org.nz, m.sorted.org.nz and the news media to help people make informed financial decisions in the face of current trends, such as changing mortgage interest rates, volatile investment returns and increasing demand for relevant information on KiwiSaver.

The Retirement Commission's future marketing activity will be dominated by:

• Offering core Sorted tools to help more New Zealanders to make informed financial decisions.
• Continuing to develop the Sorted programme so that it offers motivational guidance around money matters.
• Enhancing the sorted.org.nz, m.sorted.org.nz, retirement.org.nz and financialliteracy.org.nz websites to feature topical content and allow users to engage with the sites and one another.
• Targeting the distribution of our printed material to specific segments of the population, e.g. through supermarkets and community groups.
• Developing Sorted's community-based seminars and conversations.
• Expanding the range of KiwiSaver decision-making tools and information available for both potential and existing members.

The general Sorted and workplace financial education programmes will complement each other so key parts of New Zealand society have ready access to a range of financial education resources. The products required and the communication media used are different for each audience, but will be segmented as follows:

• Children, 5-15 years old.
• Young adults, 16-24 years old in and out of the workforce or education.
• Adults, 25-49 years old in the workplace and in the community.
• Adults, 50-65 years old in the workplace and in the community.
• Adults, 65+ years and older in the community and in the workforce.

The Retirement Commission led the development of a National Strategy for Financial Literacy. With input from many individuals and organisations across the public, private and voluntary sectors, the strategy sets a direction to link providers of financial education and information, identify any gaps in coverage and avoid duplication. A revised strategy will be launched later this year with a five-year action plan.

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 ANZ, together with other benchmarked surveys and analyses. The findings of the financial knowledge survey will be analysed and disseminated to stakeholders in the financial sector, education, government and business.

Other indicators of interest levels in personal financial management will be statistical measures of the use of all Sorted resources, brand awareness and the action taken after using Sorted resources.

1. Key financial knowledge measure:

• To reduce the size of the lowest knowledge group from 33%⁵ to 25% by 2012.

2. Sorted resource use – overall uptake goal:

• To increase the percentage of New Zealanders who use Sorted resources from 19% to 30% by December 2010 with over half the interaction being through the workplace.₆
• Increase the proportion of users of Sorted resources that rate them as useful or better – 65% (2010⁷).
• Maintain the current 89%8 of visitors who take some action as a result of visiting the website.

3. The workplace financial education programme will also be evaluated to assess the impact of KiwiSaver decision-making information and tools:

• Maintain 2007 levels indicating 28% of 18-65 year olds surveyed had used Sorted resources to help them make a decision about KiwiSaver.⁹

4. Key stakeholder/peak body annual survey on the Retirement Commission's work in creating a financially educated population.

• 70% or more of survey respondents assess the quality of the Commission's work towards creating a financially educated population as good or better.

The National Strategy for Financial Literacy advisory committee will report twice a year to the Minister of Finance through the Retirement Commission. A revised strategy will be relaunched later this year with a five-year action plan.

Outcome 2: New Zealanders have more trust in the financial services sector

Description:

A trustworthy financial services sector is fundamental to ensuring New Zealanders can manage their finances well throughout life and prepare financially for retirement. This outcome describes a financial sector that is more trusted by the public and whose products, services and charges can be better understood.

Key impacts sought:

Building a trustworthy financial services sector is going to take time given the recent loss of savings many New Zealanders have suffered and the disruption that the economic crisis has brought to the sector. The key impacts the Retirement Commission seeks are to help the sector to improve its performance and, as a result, rebuild New Zealanders' levels of trust in the sector.

Our focus is on encouraging the sector to adopt the five principles of being open, fair, accessible, expert and relevant, and on building the capability of good financial advice.

The sector will be 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 way be seen to be in conflict with the services being offered.

Activities:

The Commission will work with the financial services sector to look at options for researching consumer perspectives of trust in the various parts of the sector. We will also monitor public levels of trust and confidence and promote research and debate about ways of improving trust in, and the efficiency of, the wider sector.

We will work with officials to develop and promote the adoption and use of standard forms of disclosure of key information for financial advisers, such as the actual costs of their services and any related interests. To be of value this information will need to be communicated in plain language and be easily understood.

We will work with the sector's key representative bodies and the Government to help New Zealanders understand how to get good financial advice and how to better recognise sound financial products.

How we will measure results:

Evidence of impacts will be provided by indicators such as the development and use of improved forms of disclosure and sector 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.

A key stakeholder/peak body survey will be introduced this year on the Retirement Commission's work in actively supporting the development of a trustworthy financial services sector.

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

Outcome 3: Government's retirement income policies remain effective and stable

Description:

It is important to have stable and effective policies and practices for retirement income so New Zealanders can plan financially for their retirement with some certainty that the policy is not going to be significantly or unfavourably changed without due notice. Any change made should provide people with ample time to adjust their financial plans for retirement. This outcome describes government policy direction that is effective, stable, efficient and fair, and provides a state-funded basic income for New Zealanders.

Key impacts sought:

The Commission will influence this outcome through the periodic review process. This includes contributing research to help inform the statutory three-yearly reviews required under the New Zealand Superannuation and Retirement Income Act 2001, and reporting to the Minister for Social Development and Employment on retirement income policies being implemented in New Zealand. The Commission will further influence this outcome through the provision of advice to the Minister.

Activities:

The Commission will complete the 2010 periodic review by 31 December 2010, ensuring that it fulfils the terms of reference set by the Minister. We will provide advice when requested by the Minister, and deliver a report to the Minister on any retirement income issue the Commissioner believes the Minister should be advised of.

How we will measure results:

The effectiveness and stability of government's retirement income policies and practices will be monitored and reported on as part of the periodic reviews, which are carried out in accordance with the New Zealand Superannuation and Retirement Income Act 2001. 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.

A letter will be sent to the Minister at the end of each financial year seeking feedback on the quality and timeliness of any advice provided. The Minister will be asked to assess the degree to which the periodic review of retirement income policies met its terms of reference and was complete, balanced and clear.

A key stakeholder/peak body survey will be introduced this year on the Retirement Commission's work in contributing to stable, effective government policy.

Outcome 4: All retirement villages move to meet societal expectations and current quality standards

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 education programmes.

Activities:

The Commission will approve members of disputes panels and provide information on the disputes process.

The Code of Practice 2008 came into force on 2 October 2009. We are working with the Department of Building and Housing in ensuring the minimum requirements of the new Code are met. Our education and general information responsibility is delegated to the Department of Building and Housing which is better placed than the Commission to carry it out.

We will monitor the effects of the Act, regulations and Code of Practice and provide advice to the Minister for Building and Construction when requested or required. We will work with the Department of Building and Housing and the sector to make improvements based on the findings of our monitoring reports.

How we will measure results:

Measures will include some analysis of the nature, numbers and trends in complaints and disputes about retirement villages. Each year a monitoring report on a group or area within the retirement villages sector will be produced.

⁵ 2009 ANZ-Retirement Commission Financial Knowledge Survey

⁶ Sorted Brand Awareness Survey 2009, Nielsen

⁷ Sorted User Survey 2009, Nielsen (62%)

⁸ Sorted User Survey 2009, Nielsen

⁹ KiwiSaver Campaign evaluation – Colmar Brunton, 2008