Can employers be doing more to support their employees?

KiwiSaver has become a cornerstone of retirement planning in Aotearoa, with funds under management reaching $111.8 billion as of March 31, 2024—a 19.3% increase from the previous year[1]. As these savings grow, it's crucial to ensure they are protected and distributed according to an individual's wishes.

Employers play a pivotal role in supporting their staff's financial wellbeing. One effective way to do this is by encouraging employees to have a valid Will in place - especially when it comes to safeguarding their KiwiSaver. Here's why it matters.

1. Ensuring KiwiSaver Funds Go to the Right People

Without a Will, a person’s KiwiSaver savings may not be distributed as they intended when they pass away. Instead, the funds will be managed according to intestacy laws, which can cause delays and potential disputes among family members.

A Will ensures that a person’s assets go to their chosen beneficiaries, providing peace of mind and financial security for their loved ones.

2. Preventing Funds from Becoming Unclaimed

Unclaimed money is a significant issue in New Zealand. As of 2024, thousands of Kiwis are owed more than $477 million in unclaimed funds[2]. Some of this money belongs to estates of people who died without a Will, leaving their assets, including KiwiSaver, stuck in limbo.

Enabling employees to have a Will in place can help reduce the amount of unclaimed money and ensure their hard-earned savings are passed on smoothly.

3. Supporting Better Financial Planning

Talking about Wills naturally leads to broader conversations about financial planning. Employees who understand the importance of estate planning may be more likely to take a proactive approach to their financial wellbeing - whether it’s growing their KiwiSaver, sorting life insurance, or setting up enduring power of attorney.

Providing access to financial education and Will and estate planning services can help employees make informed decisions about their future.

4. Building Employee Trust and Wellbeing

Employers who support their employees’ financial wellbeing foster greater trust and loyalty. Offering resources or workplace seminars on estate planning shows a genuine commitment to employees’ lives beyond the office.

This can improve job satisfaction, reduce stress, and even enhance productivity, as employees feel secure knowing their affairs are in order.

5. Addressing NZ’s Growing KiwiSaver Balances

KiwiSaver balances are increasing significantly. The largest known individual balance in New Zealand is now over $2.7 million[3]. While most employees won’t reach this level, their KiwiSaver is still likely to be one of their biggest financial assets.

Without a Will, access to KiwiSaver after death can be delayed.  The Administration Act requires any estate over $15,000 to go through estate administration. Without a Will this can take 12 - 18 months to settle an estate, potentially creating financial hardship for surviving family members who may have been relying on receiving the funds sooner.

Final Thoughts

Employers have a unique opportunity to help employees take control of their financial future.  Providing access to financial planning tools, including a Will and estate planning services, not only supports employees but their families too.

Footprint Connect offers an employee benefit that includes overall financial wellbeing educational tools and resources in a single source. Employers benefit from offering a low cost, high value resource that can be accessed anywhere, anytime.

[1] Reference: https://www.fma.govt.nz/library/reports-and-papers/kiwisaver-report

[2] Reference: https://www.rnz.co.nz/news/business/518665/surge-in-unclaimed-money-managed-by-inland-revenue

[3] Reference: https://www.nzherald.co.nz/business/what-is-nzs-biggest-kiwisaver-balance/ZMNJGFRLLVAZ3MX2HLDATLO2RA/