whiriwhiria o take! - New Zealand Parliament

DISCUSS – PLAN – SORT THINGS
WHIRIWHIRIA O TAKE!
ANNUAL REPORT 2005
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c
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OUR VISION
NEW ZEALANDERS
ARE FINANCIALLY SORTED
OUR MISSION
HELPING CURRENT AND FUTURE
GENERATIONS OF NEW ZEALANDERS
TO BE FINANCIALLY
WELL PREPARED FOR RETIREMENT
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FROM THE
RETIREMENT
COMMISSIONER
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THE RETIREMENT COMMISSION HELPS NEW ZEALANDERS TO BE FINANCIALLY
WELL PREPARED FOR RETIREMENT.
Over the last year I’ve discussed financial planning and retirement savings with many
people and organisations throughout the country. Keeping in touch with New Zealanders
and finding out their concerns about planning for and living in retirement helps me to
understand the issues we face as the nature of retirement continues to change.
We have a comprehensive yet simple and cost-effective retirement income system in
New Zealand. It includes New Zealand Superannuation and voluntary private provision
for retirement. Yet, the system needs continual refining and adjusting to keep pace with
the changing needs of New Zealanders.
One of the Retirement Commission’s roles is to monitor the retirement income system so
that it remains relevant and effective for New Zealanders. To do this, a long-term focus is
vital. Whilst our next major review takes place in 2007, we’re looking to 2020 and beyond.
I consider the system to be part of a wider retirement income framework that has three
vital elements: stable, effective Government policy, a trusted financial services sector and
a financially educated population. We need these three elements in place so that all New
Zealanders have the confidence and ability to make informed and lasting decisions about
their finances throughout their lives.
During the year I have met with key decision-makers across Government and the private
sector to build consensus and awareness of this framework and a shared understanding
of how it can be achieved. I was a member of the Savings Product Working Group,
established by Government to advise on the design and implementation of work-based
savings products for retirement. I have been involved in discussions with the industry
about developing a financial services sector in which New Zealanders can have greater
trust. And I convened a working group to co-ordinate the implementation of the
Retirement Villages Act.
The Retirement Commission has a major role in financial education. We provide
independent and impartial personal financial information to as wide a range of people as
possible. In 2004/05 we made great strides in making our information more accessible
and comprehensive. We published new content on our Sorted website and made it easier
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DIANA CROSSAN
RETIREMENT COMMISSIONER
for people to find the information they need. Increasing numbers of New Zealanders are
using the website. An average of over 60,000 visit each month and the majority of these
visitors take action on their finances as a result.
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We are also strengthening our education effort in schools. Significant progress has been
made in gaining support for our Personal Financial Education in Schools project, which
aims to integrate financial education into the existing school curriculum. We will also
partner with Te Rünanga o Ngäi Tahu to extend our financial education programme
to kura and more bilingual primary schools in the coming year. And we continue to
support the Enterprise New Zealand Trust to deliver the Financial Literacy Programme in
secondary schools.
It has been a full and exciting year, and my team at the Retirement Commission and I
look forward to an equally successful year in 2005/06.
DIANA CROSSAN
RETIREMENT COMMISSIONER
New Zealand’s Retirement Income Framework
The framework has three vital elements: stable, effective
Government policy, a trusted financial services sector and
a financially educated population.
S
ON
FINANCIALLY
ME
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O
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CT
KIWIS
ORS
TRUSTED
FINANCIAL
SERVICES
SECTOR
SORTED
CF
A CT
S OC I A
STABLE,
EFFECTIVE
GOVERNMENT
POLICY
FINANCIALLY
EDUCATED
POPULATION
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MI
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O
N
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200
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T
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03
SIR EDMUND HILLARY
People do not decide to
become extraordinary...
They decide to accomplish
extraordinary things.
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MAINTAINING
STABLE EFFECTIVE
GOVERNMENT
POLICY
WE ADVISE GOVERNMENT ON IMPROVEMENTS TO POLICIES RELATING TO
PERSONAL FINANCES AND RETIREMENT INCOME.
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We currently have reasonably stable Government retirement income policy. The two
major political parties are committed to New Zealand Superannuation. They also support
Snapshot of research in 2004/05
the New Zealand Superannuation Fund established to partially pay for the rising costs of
New Zealand Superannuation in the future. On the whole, our retirement income system
This year’s research and monitoring reports
covered a wide range of topics including:
is working well so we are planning for ongoing refinement and adjustment rather than
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women’s retirement income
significant structural change.
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new evidence for New Zealand
about saving for retirement
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equity release
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consumer trust in the retail
savings industry
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current retirement income research
in New Zealand.
Environmental factors such as the economy, labour force participation and policy, and
our demographics continue to change. Like the rest of the western world New Zealand
has an ageing population due to longer life expectancy and the baby boom generation
reaching retirement age.
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People’s experiences in retirement are also changing. In the past, people who retired
literally stopped paid work. Today, some ‘retire’ from their career at 50 and take another
job, some choose new ways of working that weren’t possible when they had kids at home,
others don’t want to stop working just because they’ve reached 65, and others do. This
social transformation requires everyone to think differently about retirement and how
we will live the later part of our lives.
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New Zealand’s society is changing
We have an older and healthier population:
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The median age has increased from
26 years in 1971 to 35 in 2005 and is
expected to increase to 40 in 2020.1
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In 2005 the oldest 10% of the
population is 68 and older. In 2026 it
will be 74 and older and 2051 it will
be 81 and older.2
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For every person aged 65 and over
there will be 2.2 people in the workingage (15 to 64 years) group in 2051
compared with 5.5 people in 2004.3
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The proportion of people aged 65 and
over who are working has increased
from 5.1% to 9.4% over the past
10 years.4
The Retirement Commission monitors environmental factors and savings trends to ensure
Government and the finance sector can respond appropriately and adjust retirement
income policies as necessary.
THE YEAR IN REVIEW
Reviewing the retirement income framework more frequently
In April, the Retirement Income Act 1993 was repealed and we began to operate under the
New Zealand Superannuation and Retirement Income Act 2001 as amended by the
New Zealand Superannuation and Retirement Income Amendment Act 2005.
The Act requires us to review Government policies on retirement every three years and to
report on this to the Minister and Parliament. Previously these reviews were undertaken
every six years by the Periodic Review Group, an independent body appointed by the
Minister. We are preparing to undertake the first of these reviews in 2007.
Commissioning more research
1 Statistics New Zealand 2004, National Population Projections,
2004(base)–2051, series 5: http://www.stats.govt.nz/productsand-services/info-releases/nat-pop-proj-info-releases.htm
2 Statistics New Zealand 2004, National Population Projections.
3 Statistics New Zealand 2004, National Population Projections.
4 Statistics New Zealand, The Household Labour Force Survey 2003.
We are matching our increased monitoring and review role with an increase in research
commissioned through our Research Centre. For example, on the savings issue, different
surveys and studies give different answers to the question of whether New Zealanders
are saving ‘enough’. According to OECD data, New Zealand’s household savings rates are
lagging behind other first world countries and saving rates have declined over the past
decade. In contrast, the New Zealand 2001 Household Saving Survey showed we were
doing reasonably well at the average household level. The AXA Retirement Scope study of
9,000 people in 15 countries also demonstrated that generally New Zealanders were not
doing too badly in terms of savings. As a result, we need more information before we can
confidently say whether New Zealanders will be able to maintain their lifestyle through
New Zealand Superannuation and private provision when they retire. In particular we are
interested in the effect of:
• increasing debt levels such as student loans and credit card debt
• changing lifestyles such as buying homes later, rising housing costs, having children
later and more women in the workplace
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• the lack of workplace savings schemes and continuing pay inequity
• changing rates of workforce participation
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• issues specific to Mäori and other groups.
We also expect that Statistics New Zealand’s Survey of Family, Income and Employment
(SoFIE), which began in 2003, will help us to understand the adequacy of New Zealanders’
financial provision for retirement and factors (such as educational qualifications, family
situation, income sources or age) that most strongly affect social and economic wellbeing
over time.
New Zealand’s society is becoming
more diverse
Mäori, Pacific and Asian populations
are projected to increase their share of
New Zealand’s population by 2021:5
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The European population is expected
to reach 3.23 million – an increase
of 5% or 150,000.
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The Mäori population is expected to
reach 760,000 – an increase of 29%
or 170,000.
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The Pasifika population is expected
to reach 420,000 – an increase of
59% or 160,000.
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The Asian population (a group of
diverse ethnicities) is expected to
reach 670,000 – an increase of
145% or 390,000.
Developing NZ’s first financial knowledge survey
In December we began to develop the ANZ Retirement Commission Financial Knowledge
Survey, which will give us information about the level of financial knowledge within New
Zealand’s adult population. The survey is funded by the ANZ and also supported by the
Ministry of Economic Development. We are very grateful to the ANZ for their support for
this project. It is the first of its kind to be conducted in New Zealand and will serve as a
benchmark for the future.
The findings will help to:
• identify areas of low financial knowledge by topic and population segments
• develop education programmes so that individuals can manage their finances more
effectively
• identify improvements to design or communications relating to products
5 Statistics New Zealand, National Ethnic Population Projections
2001 (base) – 2021 update. These projections are based on
total counts. People can belong to more than one ethnic group.
• shape law reform programmes that provide effective consumer protection and address
issues facing individuals.
Full results are expected early in 2006.
Working towards implementation of the Retirement Villages Act
The Retirement Villages Act 2003 protects people entering into and living in retirement
villages and is expected to be fully implemented in 2006.
In 2004/05 the Retirement Commissioner convened a working group of four government
agencies to facilitate co-ordination and communication around the Act’s implementation.
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In early December Hon Ruth Dyson (the Minister responsible for the Retirement Villages
Act) referred a Draft Code of Practice, drawn up by the Retirement Villages Association,
to the Retirement Commissioner. The Draft Code covers a wide range of topics from
staffing, accounts and maintenance to communication and resident involvement. We
publicised the Draft Code and accompanying information and received 108 submissions
– half of which were from residents’ committees, individual residents and their families.
The Retirement Commissioner developed and presented her recommendations to the
Minister for Building Issues Hon Chris Carter in August 2005.
In June we launched a retirement villages section on the Sorted website for people
wanting to know more about whether a retirement village is right for them. Because
buying into a retirement village is not like buying a house, the new section gives an
overview of the likely costs and issues that potential residents need to consider as well
as checklists that can help decision-making and comparing options. During the year
we also published a user-friendly Guide to the Retirement Villages Act on our website
www.retirement.org.nz.
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Getting equity release sorted
Interest in equity release products has
gained momentum in New Zealand.
This reflects the changing consumer
demands of an ageing population where
some older people have inadequate
cashflow in retirement yet considerable
wealth in their homes.
Working with industry experts,
independent financial advisers and
Government bodies, we created an equity
release section on the Sorted website.
We also commissioned a report, by
Dr Judith Davey from the New Zealand
Institute for Research on Ageing, on the
potential for home equity release in
New Zealand and the motivators and
barriers to retired people using housing
wealth to improve their standard of living.
We published the report in April.
The Ministry of Social Development
has commissioned Dr Judith Davey to
complete an international literature
review of the regulation and control of
home equity release schemes, due out
later in 2005.
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KATHERINE MANSFIELD
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DEVELOPING A
MORE TRUSTED
FINANCIAL
SERVICES SECTOR
WE WORK WITH THE FINANCIAL SERVICES SECTOR AND OTHERS TO IMPROVE
THE QUALITY AND TRANSPARENCY OF FINANCIAL PRODUCTS AND SERVICES FOR
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NEW ZEALANDERS.
Like those of other countries, New Zealand’s financial services sector is complex. It is
New Zealand as a model
largely deregulated, features complicated products and is without an industry training
New Zealand’s retirement income
system is attracting overseas attention.
The Retirement Commissioner was
invited to speak at the Association of
British Insurers conference in November.
Impressed by our comprehensive yet
simple and cost-effective retirement
income system, representatives of the
United Kingdom’s Financial Services
Authority and Independent Pensions Policy
Unit visited us in March to find out more.
They were also particularly interested in
our www.sorted.org.nz programme.
organisation. While there are several codes of practice none are universal to the sector,
and only 50% of financial advisers belong to their professional bodies. These factors add
to the difficulty New Zealanders can face in making well-informed financial choices.
Part of our role is to encourage informed and challenging debate amongst members of
the sector, policymakers, academics and interest groups with the intent of developing a
more trusted and transparent financial services sector.
We also participated in a BBC
documentary, which was filmed in
November, comparing the lifestyles of
female pensioners in the United Kingdom
and New Zealand.
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The Government’s Taskforce on Financial Intermediaries and the Product and Provider
Review (managed by the Ministry of Economic Development) have the potential to make
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changes that will give the public more confidence in seeking help with their finances.
THE YEAR IN REVIEW
Encouraging discussion and transparency
Having a trusted financial services sector is crucial if New Zealand is to have an effective
retirement income framework. We are working closely with sector groups seeking
opportunities to involve its members in discussions on:
• developing recognised, relevant training and qualifications
• introducing an independent complaints process for all areas of the industry
• providing high-quality advice and products
• making fees and remuneration structures transparent.
We commissioned a report by economist Arthur Grimes on improving consumer trust
within the retail savings industry. It was intended to stimulate discussion amongst the
financial services sector, consumer groups and regulators. In his report, Arthur Grimes
made five recommendations to help improve trust in, and the efficiency of, the New
Zealand retail savings industry. They included the introduction of a standard disclosure
form that enables products to be compared and the introduction of a mandatory
requirement for advisers to declare their fee income in percentage and dollar terms for
each product.
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MAORI PROVERB
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CREATING A
FINANCIALLY
EDUCATED
POPULATION
WE PROVIDE NEW ZEALANDERS WITH INFORMATION, SKILLS AND TOOLS TO MAKE
WELL-INFORMED FINANCIAL DECISIONS THROUGHOUT LIFE.
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The financial decisions our parents and grandparents had to make were simple; people
had money and could buy things or they didn’t and went without. Today’s world is much
more complex and there are plenty of organisations offering loans or credit cards so we
can get what we want without a wait – but not without a cost. Young people are now
making serious financial choices early in life that require a level of financial knowledge
and skill that most don’t have the opportunity to learn at school.
With such a range of easily available, well promoted but complex financial products, services
and variable advice, New Zealanders need to be financially educated to make informed
decisions that are right for them. A financially educated population is also likely to be more
discerning, have higher expectations of the financial services sector and the products and
services it provides, and ultimately demand an industry more responsive to its needs.
Some of our visitors’ thoughts
on Sorted…
“As someone who has been struggling to
understand my finances over the last five
years this site has really helped me get a
better understanding of my money.”
“I knew what I needed to do, but didn’t
know the ‘ins and outs’ of how to do it.
Sorted has given me the tools to do this.”
“Made me realise that I am financially
secure and do not need to worry so much
about retirement.”
The Retirement Commission provides New Zealanders with independent, easy-to-use
personal financial information and tools through the Sorted website. And we’re working
with the education sector and others to embed financial education into the existing
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school curriculum, so that in future all young New Zealanders will leave school well
equipped to cope with the modern financial world in which we live.
THE YEAR IN REVIEW
Helping New Zealanders get Sorted
More and more New Zealanders are using the Sorted website:
• Over 90,000 people have established their own confidential plan on Sorted.
• Over 1.5 million unique users have visited Sorted.
• Visitors have completed over 3.3 million calculations on Sorted.
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Research reveals awareness
AC Nielsen research in early 2005 found
that, while awareness of the Sorted
website has remained stable over the last
two years, there has been a significant
increase in awareness amongst retired
New Zealanders – an audience we have
been targeting with our 60plus section
launched in 2004.
• Visitors stay, on average, for 15 minutes – which is amongst the longest session times
of any website in New Zealand.
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An independent online survey of Sorted users from May to June found that:
• 69% said they will take some action as a result of visiting Sorted (this figure rises to
86% amongst repeat visitors) – by updating or making a new budget, working out a
Awards!
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July 2004: Sorted Kids & Money won
a Silver Axis in the Website Design
category at the 2004 Axis Awards.
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September 2004: Sorted Kids &
Money won the Graphic-Interactive
Media & Website Design category
at the 2004 Best Design Awards.
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November 2004: Sorted website
awarded NetGuide’s 2004 Web Award
for Best Finance.
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In June 2005: Sorted website rated
the most usable and accessible
website within the Government sector
– by the State Services Commission’s
e-Govt Unit.
new financial plan, making some new financial goals, changing the way they save or
starting to reduce debt.
• 63% said that Sorted was useful (this figure rises to 82% amongst repeat visitors).
• 51% said Sorted helped them better understand how to manage their personal
finances (this figure rises to 69% amongst repeat visitors).
• 32%, who visited Sorted in 2005, registered to develop their own confidential plan
compared to 15% in 2004.
• While responses to the question ‘What difference has Sorted made to you?’ varied,
their overall theme was of empowerment and motivation and that Sorted provided
practical help and ideas.
Promoting Sorted
In 2004/05 we took a groundbreaking approach to giving New Zealanders easy
opportunities to get sorted. We syndicated the content and tools from the Sorted
website on banking sites, portals and trading sites including Westpac, KiwiBank, ASB,
XtraMSN, Trademe, Stuff and NZ City, and intranets belonging to public and private sector
organisations including Telecom NZ, the Department of Labour and the National Bank.
We held two ‘Sorted Weeks’ (one in October and the other in May) during which we made
Sorted’s calculators available from New Zealand’s most popular portals and websites
– making it near impossible for New Zealanders who regularly use the internet to miss
spotting a Sorted calculator. These promotions attracted unprecedented attention and
we had a record-breaking 113,000 visitors to the Sorted website in May.
Our brand icon, the Sorted Mouse, is an important part of the Sorted website’s effective
promotion. Financial matters are complex, time-consuming and often daunting for
many people, so the Sorted Mouse has been instrumental in making the Sorted website
approachable and attracting visitors. Our research shows he’s recognised by 60% of New
Zealanders. The Sorted Mouse is no longer just associated with a computer mouse and
our advertising line ‘when you want to get sorted on money matters, use your mouse’
– people like his friendly, engaging personality and liken him to a guide who helps people
with money matters.
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In October we partnered with the Ministry of Women’s Affairs and hosted the Women’s
Forum, an event to publicise the need for women to plan for their futures, to encourage them
to visit the Sorted website and to spread the word within their networks. The event was held
simultaneously in Auckland, Wellington and Christchurch and we invited representatives
from a wide range of women’s organisations including the Society for Research on Women,
the National Council of Women, the Mäori Women’s Welfare League, Altrusa International,
HerBusiness, YWCA, Rural Women New Zealand, Ngäi Tahu and Zonta.
In the last year we have also increased our focus on media relations as an effective way
to inform New Zealanders about money matters and encourage them to visit the Sorted
website. Using print and online media and the wealth of personal financial planning
information on the Sorted website, we have encouraged New Zealanders to take several
key steps to take control of their money matters:
1. Set financial goals.
2. Make a realistic budget and stick to it.
3. Pay off mortgages and other debt.
4. Save for the future.
Providing new information on Sorted
During 2004/05 we added four new comprehensive sections to the Sorted website:
1. Trusts – explaining how to create a family trust, the advantages and disadvantages,
costs and risks, and what’s involved with being a trustee.
2. Equity release – providing basic information about equity release schemes and how
they work.
3. Mortgages – helping people to evaluate their options when considering a mortgage
and featuring calculators to help manage mortgages from start to finish.
4. Retirement villages – providing an overview of the likely costs, legal structures and
lifestyle associated with living in a retirement village.
We plan to add information on fees, insurance and workplace superannuation in 2005/06.
Helping young Kiwis to understand money
Sorted Kids & Money is a section for children aged five to 12 on the Sorted website. It
has continued to help children understand basic money concepts with over 600,000
games played since its launch in 2004. We’ve also syndicated the games so they now also
appear on ASB and Westpac websites.
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Making Sorted more accessible for all New Zealanders
While many New Zealanders have access to the internet, some do not and some prefer
to get information in other ways. We are therefore exploring alternative ways to reach
these people. In June we began a six-week telephone information service trial in New
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New Zealand has high internet use 6
Plymouth to determine demand for over-the-phone independent financial information.
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80% of all people in New Zealand
have access to the internet.
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64% of all people in New Zealand
have internet access at home.
We have reviewed how well the Sorted website meets the needs of Mäori and Pasifika
and people with disabilities. We will make some changes in the coming year so that our
tools and information are even more accessible.
Developing financial education in schools
However these rates are lower for
some groups:
We are working collaboratively with the Ministry of Education to integrate financial
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73% of Mäori have access to the
internet (45% at home).
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62% of Pasifika people have access
to the internet (33% at home).
education into the existing school curriculum by 2009, through the Personal Financial
Education in Schools project.
We have widespread and growing support for this project from many organisations
including the Reserve Bank, Treasury, the Securities Commission, teachers’ unions, principals’
Internet users in March 2005 included:
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90% of 10-19 year-olds
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85% of 20-39 year-olds
document that would provide financial education in years 1-10 and contribute to NCEA
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75% of 40-59 year-olds
qualifications in years 11-13 while fitting in with requirements that schools already have
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58% of those aged 60+.
associations, the finance sector and community groups such as the Citizens’ Advice Bureau.
In 2004/05 we commissioned the Enterprise New Zealand Trust to develop a curriculum
to meet. The trust completed a draft curriculum document in February, which has since
been critiqued by the project’s reference group and by teachers and principals who also
6 Nielsen Panorama Quarter 1, 2005.
gave valuable advice on resources and professional development. Both groups were very
positive. We expect to complete a final curriculum document by November.
In 2005/06 we will commission an audit of existing financial education resources and
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how these may match the curriculum document. We will then call for tenders to develop
Financial Literacy Programme
teaching and learning resources for students and teachers (based on the audit’s findings),
implementation resources for schools, and a professional development programme.
Extending financial education to Mäori children and their families
While the Personal Financial Education in Schools project is geared for mainstream schools,
we are partnering with Te Rünanga o Ngäi Tahu to extend our personal financial education
programme to children and their whänau in kura and more bilingual primary schools.
We continue to sponsor the Enterprise
New Zealand Trust to deliver the Financial
Literacy Programme in secondary schools.
It remains the main opportunity for
secondary students to access financial
education. Over 100 schools have
adopted the programme, which covers:
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saving
Through this programme we are creating and evaluating resource content, methodologies,
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credit and borrowing
and teaching approaches that recognise cultural differences. Developing it in parallel to
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taxation
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banking
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budgeting
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financial planning
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investing.
the mainstream project means that both programmes will be offered at the same time,
as opposed to having options specific to Mäori developed at a later stage.
We piloted our initial bilingual programme with Ngäi Tahu in 2003/04. In June this year
we received agreement from Te Puni Kökiri for funding to extend it to other iwi.
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MEETING WITH
NEW ZEALANDERS
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JULY 2004
AUGUST 2004
SEPTEMBER 2004
SEPTEMBER 2004
SEPTEMBER 2004
WELLINGTON
Westpac Luncheon
for Senior Women
in Government
AUCKLAND
The Association of
Superannuation Funds
of New Zealand
Conference
JOHNSONVILLE
Onslow Probus Club
GERALDINE
Geraldine
Women’s Group
KAIKOURA
He Oranga Pounamu
Provider Hui
JANUARY 2005
FEBRUARY 2005
MARCH 2005
APRIL 2005
MAY 2005
MT ROSKILL
Rotary Club
WELLINGTON
Wellington
Law Society
AUCKLAND
Conferenz – SuperFunds
Summit 2005
WELLINGTON
National Council
of Women
DUNEDIN
Polson Higgs
Business Seminar
WELLINGTON
Financial Planners &
Insurance Providers
Conference
NEW PLYMOUTH
Positive Ageing Trust
WELLINGTON
Justice of the
Peace Association
NEW PLYMOUTH
Society of Independent
Financial Advisers
DURING THE YEAR WE’VE DISCUSSED MONEY MATTERS AND FINANCIAL PREPARATION
FOR RETIREMENT WITH MANY PEOPLE AND ORGANISATIONS THROUGHOUT THE
COUNTRY. THESE CONVERSATIONS PROVIDE OPPORTUNITIES FOR US TO SHARE OUR
VISION AND TO KEEP IN TOUCH WITH EVERYDAY ISSUES NEW ZEALANDERS FACE AS
THEY’RE MAKING FINANCIAL DECISIONS FOR THE FUTURE.
OCTOBER 2004
AUCKLAND
WELLINGTON
CHRISTCHURCH
Women’s Forum
OCTOBER 2004
NOVEMBER 2004
NOVEMBER 2004
NOVEMBER 2004
DECEMBER 2004
KAPITI
Grey Power
NAPIER
NZ Actuaries
Conference
DUNEDIN
NZ Federation of
Family Budgeting
Services
WELLINGTON
Volunteer
Community
Co-ordinators
Policy Forum
AUCKLAND
Launch of the
Financial Literacy
Research Project
MAY 2005
MAY 2005
MAY 2005
JUNE 2005
JUNE 2005
AUCKLAND
Retirement Villages
Association Conference
TAURANGA
Tauranga Chamber
of Commerce Regional
Women in Business
Conference
WHAKATANE
Environment
Bay of Plenty
Women’s Group
WELLINGTON
Women’s
Convention
NEW PLYMOUTH
Telephone financial
information service trial
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SELWYN TOOGOOD
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STATEMENT OF
RESPONSIBILITY
We acknowledge responsibility for:
• preparing these financial statements and the judgements used within them
• establishing and maintaining a system of internal control that provides reasonable
assurance of the integrity and reliability of the Commissioner’s financial reporting.
In our opinion these financial statements fairly reflect the financial position and
operations of the Retirement Commission for the year ended 30 June 2005.
D B CROSSAN
RETIREMENT COMMISSIONER
24
D FESLIER
EXECUTIVE DIRECTOR
STATEMENT OF SERVICE
PERFORMANCE
Output Class: Retirement Commissioner’s Programme
Funding from the Crown for the year 2004/05 was set at $3,396,556 (GST exclusive).
Crown Revenue
Expenditure
$3,396,556
$3,733,728
Some interest income, and funding from the private sector was also received. The private sector funding was for the ANZ
Retirement Commission Financial Knowledge Survey.
Allocation is as follows:
Public education and information programme
$2,469,499
Retirement villages
$ 105,492
Research, advice, monitoring, office costs
$1,158,737
Total
$3,733,728
Overall
Through education programmes, the Retirement Commission aims to improve the personal financial knowledge and capability
of New Zealanders. The quality of the personal financial decisions New Zealanders make everyday will impact on the quality
of life they have in retirement.
In the 2004/05 year, the Commission has been continuing to develop its reporting against the outcomes above. Of key
importance in this process is the ANZ Retirement Commission Financial Knowledge Survey which will set a benchmark
against which further educational initiatives can be assessed. As interim measures the Commission has undertaken surveys
to estimate the short-term outcome of some of its educational initiatives. Some key findings are listed under Education
and Information.
ADVICE
Description
The advice part of the
output class includes
advising and reporting
to the Minister on
retirement income
and related issues.
Actual: The Commission
provided quarterly
reports to the Minister,
and the 2003/04
annual report.
Quantity
Quantity will be
determined by requests
made by the Minister
during the year, and
by other reports the
Commissioner delivers
to the Minister.
Quality
The Minister will be
asked annually to
provide an assessment
of the quality, timeliness
and appropriateness of
advice provided by the
Commissioner.
Actual: The Commission
provided quarterly
reports to the Minister,
and the 2003/04
annual report.
Actual: ‘High quality
advice and support’.
Timeliness
Key dates will be met
and will reflect agreed
priorities as specified
in each project plan.
Actual: ‘Provided on
a timely basis’.
25
>
RESEARCH AND MONITORING
Description
The research and monitoring part of the output class includes establishing the Retirement Income Research Centre, monitoring
trends in levels of awareness, knowledge, attitudes and behaviours relating to retirement planning. It also includes monitoring the
effectiveness of private sector financial ombudsmen.
Quantity
Measure
Actual
There will be four research/
monitoring projects.
Seven completed (marked * below).
Retirement Income Research Centre:
promotion of the centre, its website
www.retirement.org.nz, and its
research programme. The centre will
be used by researchers, policy analysts
and the financial services industry.
Two further reports were released by Treasury and were partially funded by
the Retirement Commission from the series analysing the Household Savings
Survey. They were:
• *Women’s Retirement Income In New Zealand – A Household Bargaining
Approach
• *Saving for Retirement – New Evidence for New Zealand.
Knowledge of personal finances:
research into the levels of personal
financial knowledge of New Zealanders
will be undertaken.
Development work for the ANZ Retirement Commission Financial Knowledge
Survey continued in 2004/05. This research will provide a benchmark measure
of the level of financial knowledge of adult New Zealanders.
Survey of net worth and saving: subject
to the availability of survey data from
Statistics New Zealand, further analysis
of the Household Savings Survey will be
undertaken in 2004/05.
*A research proposal, ‘Analysis of the Household Asset and Liability Data in
Wave 2 of the Survey of Family Income and Employment (SoFIE): A Research
Proposal’ was jointly funded by Treasury and the Retirement Commission
to prepare for the next phase of work on the financial preparation of New
Zealanders for retirement.
Evaluation of communications
programme: we will regularly
monitor the effect our education and
information programme is having on
the awareness, knowledge, attitudes
and behaviours of New Zealanders
to retirement provision. This will be
achieved through research and surveys
amongst our target audiences.
*A major survey, ‘Sorted, Financial and Retirement Planning 2005’, was
completed. The survey looked at the Sorted brand, and also provided insights
into retirement planning attitudes and behaviours.
• Confidence in ability to manage their finances and financial planning is high;
nearly three-quarters of those surveyed feel confident or very confident.
• Seven in 10 people say they have financial goals.
• Six in 10 people have a financial plan to achieve their financial goals, and
three-quarters of these regard it as specific, rather than vague in detail.
• In terms of expectations for retirement, non-retired people typically expect
to be working part time in paid employment (28%), spending time with
family (27%) and/or travelling (18%).
• Expectations of people’s standard of living in retirement suggest people
generally envisage a standard of living that is the same as it is now, rather
than better or worse.
• 20% of New Zealanders say they have visited the Sorted website.
An online survey measured the use and value of the Sorted website amongst
visitors. Key findings are listed under Education and Information.
26
Scholarships: the Commission will
establish a Masters and PhD scholarship
to encourage graduates to study
retirement income issues in New Zealand.
As a way of encouraging research into retirement income issues,
a PhD and Masters scholarships were offered. The lack of interest
was disappointing. However, interest appears higher now and they
are being offered again in 2005/06.
Monitoring others’ research: we will
maintain excellent networks to ensure
we know of and can use research
material on retirement income that
others undertake, including academics,
industry, government agencies and
overseas organisations.
We continue to maintain excellent networks of academics, savings
industry, government agencies and overseas organisations. This will be
of considerable assistance in preparation for the 2007 Periodic Review
the Retirement Commissioner is required to undertake under the
New Zealand Superannuation and Retirement Income Act 2001.
As part of Government’s response
to the 2003 Periodic Report Group’s
recommendations, the Commissioner has
taken on extra monitoring duties. This
involves monitoring the research that is
being undertaken by officials and others,
and ensuring that the required research
will be available for the 2007 review.
*A report was completed on current retirement income research
being undertaken in New Zealand. This report is available on
www.retirement.org.nz. A research plan for the 2007 review is being
developed and will be completed in the 2005/06 financial year.
The following additional projects were also undertaken during the year:
* A discussion paper on ‘Improving Consumer Trust in the Retail Savings Industry’ was commissioned. This paper, placed on
the web discussion forum, is intended to stimulate debate and contribute towards the Product and Provider Review being
undertaken by the Ministry of Economic Development.
* A research report, ‘The Prospects and Potential for Home Equity Release in New Zealand’ was released and is available on
www.retirement.org.nz.
Discussion forums were held during the year on annuities, home equity release, and financial decision making. Reports were placed
on the website. The research website www.retirement.org.nz/research has been maintained and regularly updated with topical
reports, data and analysis.
Quality
Quality over each project is assured by obtaining independent review as considered appropriate for each project. These reviews
will be sought both prior to the implementation of the project, and upon completion to ensure a satisfactory level of quality is
maintained as specified in each project plan. Terms of reference for assessing quality will include appropriateness, timeliness and
management. All major (greater than $50,000) projects will be subject to the Commission’s Quality Assurance Processes.
Actual:
• Reports from the Household Savings Survey were thoroughly reviewed by an overseas expert.
• The proposal for the analysis of the Survey of Family Income and Employment (SoFIE) has been peer reviewed.
• An expert steering group was established to assist in the development of the ANZ Retirement Commission Financial
Knowledge Survey.
• ‘The Prospects and Potential for Home Equity Release in New Zealand’ proposal and report were both reviewed.
Timeliness
Owing to the ‘ground-breaking’ nature and complexity of the ANZ Recruitment Commission Financial Knowledge Survey,
it has taken longer than expected. Other projects were on time and reflect agreed priorities.
27
>
RETIREMENT VILLAGES
Description
The Retirement Commissioner was given new functions under the Retirement Villages Act 2003 enacted on 30 October 2003,
with most provisions coming into force by Order in Council at a date or dates yet to be determined. This part of the output class
includes advising, providing education, monitoring, and establishing a disputes panel related to retirement villages.
(Note: The main provisions of the Retirement Villages Act have not yet come into force as expected. This has significantly affected the ability of the
Commission to carry out its functions in this area.)
Quantity
Retirement Villages activities developed, implemented and maintained, consisting of the components below:
28
Measure
Actual
A monitoring and research programme
on the effects of the Act, regulations
and Code of Practice when in force.
As the Act, regulations and Code of Practice are not yet in force, this activity was
further deferred. A benchmark survey of residents of retirement villages, with
some preliminary information sought from operators, has been commissioned.
Advice to the Minister when requested.
None requested.
An education programme aimed at
informing residents and intending
residents, with a website section set
up in March 2004 and development of
education resources (to be launched
July 2004).
Parts of this activity have been delayed, pending the Act coming into force and
the regulations being made. A comprehensive ‘Guide to the Act’ was placed on
www.retirement.org.nz in November 2004.
Two email newsletters on retirement village issues were sent to stakeholders
in August and December 2004. Information for prospective residents of
retirement villages was launched on the Sorted website in June 2005.
Development of the disputes panel
(to be established by mid 2005).
Deferred until relevant sections of the Act and regulations are in force. Funding
for the disputes panel will be received in 2005/06 and preparations have been
started for recruitment and training of panel members, including development
of a database. The Commission provided extensive comment on two drafts of
Retirement Villages (Dispute Panel) Regulations.
Recommendations to the Minister on
a Code of Practice for the industry by
30 November 2004.
The draft Code of Practice was not received from the Minister until 6 December
2004. It was publicly notified by the Commissioner on 8 December 2004.
108 submissions were received by end March 2005, half were from residents
of retirement villages. Detailed analysis and summary of submissions were
prepared in April 2005 and recommendations to Minister are being finalised.
Quality
Measure
Actual
Quality of the education and
monitoring/research programmes,
disputes panel and Code of Practice
is assured by obtaining independent
review. The Minister will be asked
annually to provide an assessment
of the quality, timeliness and
appropriateness of advice.
Educational material
• The Guide to the Act was reviewed by a lawyer and the Ministry of
Social Development to ensure it was relevant and correct. Changes were
made accordingly. It was edited to be in plain English.
• The Sorted resources were drafted inhouse and by an experienced retirement
villages lawyer, going through the usual Sorted processes. This included a
range of peer reviewers representing residents/consumers and the industry,
who provided positive feedback.
All major (greater than
$50,000) projects will be
subject to the Commission’s
quality assurance processes.
Code of Practice consultation
• The Code of Practice project included detailed planning, liaising with
the Ministry, following best practice consultation, providing background
information, widely publicising it and sending copies to all villages for
residents and operators, providing sufficient time and receiving good
quality submissions.
Disputes panels
• Advice sought from external experts.
Timeliness
Measure
Actual
Key dates will be met and will reflect
agreed priorities. These can only be
approximate at present pending
drafting of the regulations and the
remaining provisions coming into force,
on which the Commissioner’s ability to
carry out these functions depends.
Throughout the year timeframes have been continually adjusted to
reflect the ongoing slippage in the implementation of the Act. This has
delayed finalising any education resources and setting up the disputes
panel system. The Code of Practice was delayed by over four months in
being referred to the Commissioner by the Minister, with the magnitude
of issues raised by the Ministry, submissions and others warranting the
preparation of extensive recommendations.
29
>
EDUCATION AND INFORMATION
Description
The education and information part of the output class includes developing education and information programmes that improve
the public’s understanding of lifetime financial management; improve the public’s knowledge of how to go about financial planning;
encourage the public to make voluntary savings; and encourage other organisations to have similar goals.
Quantity
Education and information programme developed, implemented and maintained, consisting of the components below.
Measure
Actual
Young people: the programme
for young people (5-25) aimed
at providing personal financial
educational material, will continue
to be enhanced.
The promotion, games, activities and information on Sorted Kids & Money
has continued to draw in children, parents and teachers and help children
understand basic financial concepts. From launch in February 2004 over
600,000 Kids & Money games and activities have been played on Sorted.
Using Sorted’s syndication relationship with XtraMSN two separate Kids & Money
Treasure Hunts were conducted. These encouraged children to play the Kids &
Money games and find particular items in them. Sorted t-shirts, posters, and stickers
were sent to the winners.
Sorted Kids & Money Colouring Competitions in national and community
newspapers were also conducted.
Partnerships with the banking sector have led to Sorted’s Kids & Money games
appearing on Westpac’s and ASB’s youth sites.
A repeat of the successful Sorted Students promotion used in May 2004 was
conducted in October-November 2004 and April 2005. These collectively drove
over 10,000 visits to Sorted.
A content syndication agreement was established with Student Job Search in
March 2005 to enable Sorted’s Student Loan Calculator to appear alongside
their job listings.
Mäori programme: subject to
successful pilots, the joint Te Puni
Kökiri-Retirement Commission
programme for young Mäori will
start to be rolled out in 2004/05.
30
Funding has been secured from Te Puni Kökiri for an extension to the
bilingual financial education programme pilot. The implementation will
take place in 2005/06.
Promotional component: television,
web advertising (and other media)
are the ways the Commission draws
attention to its education programme,
the material on the Sorted website.
Television and online media have worked in conjunction with
public relations to ensure Sorted remains current and relevant to
New Zealanders’ needs.
By creating best practice in online media Sorted has developed
sustainable content syndication and advertising partnerships with most
of New Zealand’s most popular websites and portals. Sorted tools and
material can now be found on Trademe.co.nz, Scoop.co.nz, FindA.co.nz,
Stuff.co.nz, XtraMSN.co.nz, NZCity.co.nz and NZflatmates.co.nz.
In November 2004 Sorted was awarded ‘Best New Zealand Finance
Site’ at the NetGuide Web Awards. Sorted is also rated by State Services
Commission assessors ‘e-Gov Watch’ as the most usable and accessible
website within the government sector.
Sorted website user statistics
Comprehensive website reporting has played a key part in helping
the Sorted promotion, brand and website deliver relevant material to
New Zealanders.
Since Sorted was launched in October 2001 more than 1.59 million
unique users* have visited the website making over 3.31 million
calculations and playing over 600,000 games.
At 30 June 2005 Sorted has over 97,000 My Plan members who have
saved their calculations into their own confidential online account and
continue to use Sorted regularly to stay on top of their money matters.
The personalised services like My Plan and Sorted’s other interactive tools
resulted in people visiting Sorted an average of over 15 minutes for the
months June 2004 to January 2005. This is amongst the longest session
times of any websites in New Zealand.
SORTED KEY STATISTICS FOR 2004/05
Total visitors
Total unique visitor sessions
Total calculators completed
795,862
594,269*
1,383,799
Average visitors per month
Average unique visitor session per month
Average user session
Average calculations completed per month
Average cost per visit
66,321
49,522*
15 minutes 42 seconds
115,316
$2.24
* Unique browsers are used as an indicator of the number of unique individuals visiting the website. Unique browsers measure the number of
times people visit a site using an internet browser on a computer.
31
Schools programme: provides
participating schools with resources
aimed at improving the financial
literacy of senior secondary school
students.
The Commission continues to sponsor the Enterprise New Zealand Trust to
deliver the Financial Literacy Programme in over 100 senior secondary schools.
This modular programme teaches personal financial skills in areas that include
budgeting, financial planning, saving, borrowing, investing, taxation, income and
insurance. Students can gain NCEA accreditation for parts of the programme.
In 2005 the Commission has provided support to an extension of the Money
Stuff programme into Northland with year 9/10 students. The lessons will use
Money and Finance as the context and relate to the curriculum of our Personal
Financial Education School Curriculum Project. Other funding support for the
Northland programme is through NZ Trade and Enterprise.
Curriculum programme: is aimed at
providing resources that can be used
within the current curriculum to teach
personal financial skills.
A tender was let to the Enterprise New Zealand Trust in September 2004 to
prepare a draft curriculum. The draft curriculum was received in February 2005
and presented to the reference group in March 2005. The draft was rated highly
by the reference group and a proposal that the draft be critiqued by an ‘expert’
group was accepted.
A group consisting of teachers, primary and secondary school principals,
community agencies, Ministry of Education officials and private financial
sector agencies, all with experience and/or an interest in financial education,
attended a two-day workshop. They critiqued the draft for its content and
appropriateness for schools. The curriculum has been praised for its innovation.
A tender has been let for the draft to be finalised.
Next steps include an audit of existing resources related to financial education
and then the development of new resources and professional development
programmes for teachers.
The programme for retired people
will continue to be enhanced. It is
aimed at providing older people with
educational financial information.
Sorted 60plus continued to provide older New Zealanders with information
and calculators for managing money matters in retirement.
New content on retirement villages and equity release was added in April
and May 2005.
Independent research on the Sorted programme also indicated a notable
increase of awareness of the Sorted programme amongst retired people moving
from 13% in 2003 to 45% in 2005. This can be largely attributed
to the promotion of Sorted 60plus.
Interview programme: interviews with
media will be sought as appropriate,
in order to explain the Commission’s
activities, or encourage private
provision for retirement.
32
Frequent interviews (24) were given to a range of media throughout the year.
Article programme: articles will be
written and provided to various media,
in order to explain the Commission’s
activities, or encourage private
provision for retirement.
A steady stream of articles (33) were written for syndication to print and
online news media. Regular articles from the Commissioner were written
for the Marlborough Express and the Sunday Star-Times.
Ongoing articles were also published on XtraMSN.co.nz, Stuff.co.nz and
NZCity.co.nz.
A review of media coverage shows the Commission gets both a high
level of coverage of its media statements, and receives 80% neutral or
positive coverage.
Speeches programme: speeches will be
made to a variety of audiences in order
to explain the Commission’s activities,
or encourage private provision for
retirement.
Frequent (39) speeches were given to a range of community, financial
services, industry and government sector groups.
Websites: the websites will be regularly
refreshed and updated.
www.retirement.org.nz
• The Commission has continued to publish ongoing retirement income
research and market reports in the Research Centre of retirement.org.nz.
24 media statements were released by the Retirement Commission.
• 18,291 visitors have been to the site over the year.
• A new retirement villages section was added in December with information
on the Retirement Villages Act 2003 and its draft Code of Practice.
• A moderated discussion forum was added in June 2005 to encourage
review and discussion of retirement income policy issues.
www.sorted.org.nz
In 2004/05 the back and front end of Sorted was rebuilt and redesigned
to improve the site’s content management, accessibility, usability and
personalisation. This redevelopment has resulted in a considerable rise
in the number of calculators completed on the site.
Additional sections added to Sorted:
• trusts
• retirement villages
• equity release
• mortgages.
Additional calculators added to Sorted:
• quick mortgage calculator
• quick student loans calculator
• credit card calculator.
Workplace: educational material will
be available for employers who are
considering establishing a workplace
programme.
The At Work section of Sorted has been maintained, with information for
both employers and employees. Sorted content and tools have remained
on at least five organisations’ intranets. This information provides staff
with personal financial education through links to www.sorted.org.nz
and/or downloadable Sorted Offline material.
33
As part of Government’s response
to the 2003 Periodic Report Group’s
recommendations, the Commissioner
has taken on extra education and
information projects. These involve
the development of a pilot for a
financial information service, further
development of the Sorted website
to provide information specifically
targeted at women and Mäori, and
information on finance service and
product fees transparent to consumers.
A pilot of a financial information service commenced in New Plymouth in
June and went into the 2005/06 financial year. An 0800 number was available.
Results are currently being analysed and will be available in the first quarter
of 2005/06.
A joint Retirement Commission/Ministry of Women’s Affairs forum was held
with representatives from a wide range of women’s community and business
groups in Auckland, Wellington and Christchurch. Sorted financial planning
material from this conference was widely disseminated amongst the
networks represented.
A review of the Sorted website and suitability for Mäori was undertaken. Results
are expected early in the 2005/06 year.
Work on making product and adviser fees transparent to consumers is expected to
be completed by 30 September 2005.
Quality
Measure
Actual
Quality of the education and
information programme is assured
by obtaining independent review, or
piloting or pre-testing as considered
appropriate for each project.
Ongoing monitoring of site traffic levels, calculator completion and My Plan
registrations ensured communication activity resulted in enhancement on the
Sorted website, and to the evaluation of site promotion.
All major (greater than $50,000)
projects will be subjects to the
Commission’s quality assurance
processes.
External review of all content additions was conducted from industry body
representatives, financial and communications experts and appropriate
interest groups.
Assessing progress and gaps in New Zealanders’ financial knowledge and
understanding continued through 2004/05. In March 2005 independent
research was commissioned to measure aspects of the education programme.
Key results for non-retired New Zealanders include:
• Seven in 10 New Zealanders recalling Sorted’s byline, ‘when you want to get
sorted on money matters, use your mouse’.
• Awareness of Sorted has increased from 2003 research in each age band except
for the 20-24 age band. Work will be undertaken in 2005/06 to improve this.
• Awareness levels of Sorted are similar among Mäori and non-Mäori.
• Bank websites and Sorted are where people are most likely to get financial
information online to help manage their personal finances.
34
People who had visited Sorted provided some interesting insights:
• In 2005 the perceptions of Sorted as ‘an authority on financial matters’
has increased considerably from 2003 with over 73% of site visitors rating
it highly.
• 69% indicated that it was either ‘useful’ or ‘very useful’.
• 41% indicated that it had helped them assess their financial situation.
• 73% consider it ‘quite likely’ or ‘very likely’ they will visit Sorted again.
• 60% of people have visited Sorted more than once.
An independent online survey of Sorted users was undertaken in June
2005 to measure the difference Sorted makes to visitors:
• 51% of Sorted visitors felt Sorted helped them better understand how
to manage their personal finances.
• 63% of Sorted visitors consider Sorted to be useful or very useful.
• 69% of Sorted visitors consider it likely or very likely that they will
take some action or change the way they are currently managing their
money. Key actions people mention:
1 Update a budget/make a new one.
2 Work out a new financial plan.
3 Make some new financial goals.
4 Change the ways they’re saving.
5 Start a debt reduction plan.
• 81% of Sorted visitors consider it likely or very likely that they will visit
Sorted again.
• 65% of Sorted visitors are likely or very likely to recommend Sorted
to a friend.
• 73% of Sorted visitors aged under 15 years are likely or very likely
to visit Sorted again.
• 54% of Sorted users aged under 15 years are likely or very likely to
recommend Sorted to a friend.
Timeliness
Measure
Actual
Key dates will be met and will reflect
agreed priorities as specified in each
project plan.
All education and information projects have been delivered on time.
Some promotions were undertaken later than expected (and went into
the 2005/06 financial year) owing to the unavailability of appropriate
television media.
35
STATEMENT OF
ACCOUNTING POLICIES
>
FOR THE YEAR ENDED 30 JUNE 2005
REPORTING ENTITY
The Retirement Commissioner was appointed under the Retirement Income Act 1993
and continued under the New Zealand Superannuation and Retirement Income Act
2001, as amended by the New Zealand Superannuation and Retirement Income
Amendment Act 2005. The Retirement Commissioner is a corporation sole and a Crown
entity under Crown Entities Act 2004. For 2004/05 the financial statements continue to
be prepared in accordance with the Public Finance Act 1989.
MEASUREMENT BASE
The financial statements have been prepared on a historical cost basis.
ACCOUNTING POLICIES
The following accounting policies which materially affect the measurement of financial
performance and financial position have been applied.
Budget figures
The budget figures are those approved by the Retirement Commissioner and are based
on the purchase agreement that was approved by the Minister. Because of this, the
budgeted figures were calculated prior to the end of the financial year 30 June 2004.
The budget figures have been prepared in accordance with generally accepted
accounting practice and are consistent with the accounting policies adopted by the
Commissioner for the preparation of the financial statements.
Revenue
The Office of the Retirement Commissioner derives revenue through the provision of outputs
to the Crown, for services to third parties and interest on its investments. Such revenue is
recognised when earned and is reported in the financial period to which it relates.
Goods and Services Tax (GST)
These financial statements have been prepared on a GST exclusive basis except for
accounts receivable and accounts payable which are stated inclusive of GST.
Fixed assets
The initial cost of a fixed asset is the value of the consideration given to acquire or
create the asset and any directly attributable costs of bringing the asset to working
condition for its intended use.
Depreciation
Depreciation is provided on a straight line basis on all fixed assets at a rate which will
write off the cost of the assets to their estimated residual value over their useful lives.
The useful lives and associated depreciation rates of major classes of assets have been
estimated as follows:
36
Office equipment
2-13 years
7.8% – 48%
Furniture and fittings
5-15 years
6.5% – 18.6%
Computer equipment
3-6 years
15.5% – 36.0%
Commitments
Future payments are disclosed as commitments at the point a contractual obligation arises.
Leases
The Office of the Retirement Commissioner leases office premises, a photocopier and
a car park. As all the risks and ownership are retained by the lessor these leases are
classified as operating leases. Operating lease expenses are recognised on a systematic
basis over the period of the lease.
>
Financial instruments
The Office of the Retirement Commissioner is party to financial instruments in the form
of bank accounts, short-term deposits, accounts receivable and accounts payable as
part of its operations. These are recognised in the Statement of Financial Position and
all revenue and expenses in relation to the financial instruments are recognised in the
Statement of Financial Performance.
Investments
Investments are stated at the lower of cost and net realisable value. Any write-downs are
recognised in the Statement of Financial Performance in the period in which they occur.
Taxation
The Office of the Retirement Commissioner is, as a public authority, exempt from
income tax.
Employment entitlements
Provision is made in respect of liability for annual leave. Annual leave is expected to be
settled within 12 months (or approval gained to carry forward leave) of reporting date,
and is measured at nominal values on an actual entitlement basis at current rate of pay.
The Office of the Retirement Commissioner does not provide long service leave or
retirement leave.
Accounts receivable
Accounts receivable are stated at net realisable value.
Statement of cash flows
The Statement of Cash Flows is prepared exclusive of GST, which is consistent with the
method used in the Statement of Financial Performance.
Definitions of the terms used in the statement of cash flows are:
‘Cash’ includes coins and notes, demand deposits and other highly liquid investments
readily convertible into cash and includes at call borrowings such as bank overdrafts,
used by the entity as part of its day-to-day cash management.
‘Investing activities’ are those activities relating to the acquisition and disposal of
current and non-current investments and any other non-current assets.
‘Financing activities’ are those activities relating to changes in equity of the entity.
‘Operating activities’ include all transactions and other events that are not investing or
financing activities.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies since the date of the last audited
financial statements.
37
STATEMENT OF
FINANCIAL PERFORMANCE
Notes
FOR THE YEAR ENDED 30 JUNE 2005
>
2005
Actual
$
2005
Budget
$
2004
Actual
$
Revenue Crown
3,396,556
3,371,556
3,362,667
Interest income
84,787
–
63,312
500
–
981
100,000
–
–
253
–
513
3,582,096
3,371,556
3,427,473
263,453
360,000
35,898
12,900
8,040
7,915
2,377
3,409
2,319
11,603
16,644
11,864
6,669
9,565
8,673
2,469,499
2,240,090
2,901,814
53,439
62,400
59,535
Retirement villages
105,492
106,668
8,100
Salaries
553,755
540,348
487,480
–
–
5,279
254,541
194,760
190,249
3,733,728
3,541,924
3,719,126
Revenue
Gain on sale of fixed assets
Private sector funding
Sundry income
Total revenue
Expenditure
Advice and research
Audit fees
Depreciation – office equipment
Depreciation – computer equipment
Depreciation – furniture & fittings
Education and information programme
Rent
Loss on sale of fixed assets
Other operating costs
Total expenditure
Net surplus/(deficit) for the year
The Statement of Accounting Policies and notes
form part of and are to be read in conjunction
with these financial statements.
38
1
(151,632)
(170,368)
(291,654)
STATEMENT OF
MOVEMENTS IN EQUITY
Notes
FOR THE YEAR ENDED 30 JUNE 2005
>
2005
Actual
$
2005
Budget
$
2004
Actual
$
775,485
454,254
1,067,138
Net surplus/(deficit) for the year
(151,632)
(170,368)
(291,653)
Total recognised revenue and expenses
for the period
(151,632)
(170,368)
(291,653)
Public equity at the end of the year
623,853
283,886
775,485
Public equity at the start of the year
2
The Statement of Accounting Policies and notes
form part of and are to be read in conjunction
with these financial statements.
39
STATEMENT OF
FINANCIAL POSITION
Notes
FOR THE YEAR ENDED 30 JUNE 2005
>
2005
Actual
$
2005
Budget
$
2004
Actual
$
Cash at bank
588,796
101,148
151,067
Short-term deposits
591,783
582,526
857,432
429
2,866
3,983
–
–
564
101,853
21,143
15,139
1,305
1,270
1,270
708,953
1,029,455
42,953
30,009
46,937
1,327,119
738,962
1,076,392
681,208
434,411
280,242
22,058
20,665
20,665
703,266
455,076
300,907
Taxpayer funds
200,000
200,000
200,000
Accumulated surplus
423,853
83,886
575,485
Total public equity
623,853
283,886
775,485
1,327,119
738,962
1,076,392
Current assets
Accrued interest
Accounts receivable
GST refund due
Prepayments
Total current assets
1,284,166
Non-current assets
Fixed assets
Total assets
3
Current liabilities
Accounts payable
Provision for employee entitlements
Total current liabilities
Public equity
Total public equity and liabilities
The Statement of Accounting Policies and notes
form part of and are to be read in conjunction
with these financial statements.
40
STATEMENT OF
CASHFLOWS
Notes
FOR THE YEAR ENDED 30 JUNE 2005
2005
Actual
$
2005
Budget
$
2004
Actual
$
3,396,556
3,793,000
3,362,667
88,340
–
63,637
100,000
–
–
817
–
1,055
3,585,713
3,793,000
3,427,359
Cash flows from operating activities
Cash was provided from:
Crown revenue
Interest received
Private sector funding
Sundry income
Cash was applied to:
Net GST paid
Payments to suppliers and employees
Net cash flows from operating activities
4
(86,714)
(49,950)
(3,310,754)
(3,883,800)
(4,317,428)
(3,397,468)
(3,933,750)
(4,244,317)
(140,750)
(816,958)
188,245
73,111
Cash flows from investing activities
Cash was provided from:
Sale of fixed assets
500
–
981
Cash was applied to:
Purchase of fixed assets
(16,665)
(15,600)
(12,449)
Net cash flows from investing activities
(16,165)
(15,600)
(11,468)
Net increase in cash held
172,080
(156,350)
(828,426)
Plus cash at the start of the year
1,008,499
840,024
1,836,925
Cash held at the end of the year
1,180,579
683,674
1,008,499
Cheque account
588,796
101,148
151,067
Short-term investments
591,783
582,526
857,432
1,180,579
683,674
1,008,499
Represented by
Cash held at the end of the year
The Statement of Accounting Policies and notes
form part of and are to be read in conjunction
with these financial statements.
41
NOTES TO THE
FINANCIAL STATEMENTS
>
FOR THE YEAR ENDED 30 JUNE 2005
2005
Actual
$
2004
Actual
$
3,885
3,180
Education, research & advertising
2,465,614
2,898,634
Total education and information
2,469,499
2,901,814
1. EDUCATION AND INFORMATION
Consultant fees
2. MAJOR BUDGET VARIATIONS
The opening budgeted equity differs from the actual closing equity for the year ended
30 June 2004 due to the budget being calculated prior to the end of the financial year
30 June 2004. The level of retained earnings at 30 June 2004 was greater than expected
owing to the timing of projects in the 2004 year.
3. FIXED ASSETS
Leasehold improvements
At cost
Accumulated depreciation
Office equipment – net book value
7,576
–
7,576
Office equipment
At cost
Accumulated depreciation
Office equipment – net book value
36,384
(27,015)
9,369
44,085
(38,428)
5,657
Furniture and fittings
At cost
Accumulated depreciation
Furniture and fittings – net book value
92,216
(78,590)
13,626
92,218
(71,921)
20,297
Computer equipment
At cost
Accumulated depreciation
Computer equipment – net book value
80,448
(68,066)
12,382
77,446
(56,463)
20,983
216,624
(173,671)
42,953
213,749
(166,812)
46,937
Total fixed assets
At cost
Accumulated depreciation
Total carrying amount of fixed assets
42
–
–
–
NOTES TO THE
FINANCIAL STATEMENTS
>
CONT
FOR THE YEAR ENDED 30 JUNE 2005
2005
Actual
$
2004
Actual
$
4. RECONCILIATION OF NET SURPLUS/(DEFICIT)
TO NET CASH FLOW FROM OPERATING
ACTIVITIES FOR THE YEAR ENDED 30 JUNE 2005
Net surplus/(deficit) for year
(151,632)
(291,653)
Plus non-cash items:
Depreciation
Loss on sale of assets
20,649
22,856
–
5,279
(130,983)
(263,518)
Add/(less) movements in other working capital items:
(Increase)/decrease in accrued interest
(Increase)/decrease in prepayments
Increase/(decrease) in accounts payable
(Increase)/decrease in accounts receivable
(Increase)/decrease in GST refund due
Increase/(decrease) in holiday pay accrual
3,553
(35)
400,966
564
324
(116)
(628,004)
610
(86,713)
73,043
1,393
1,684
188,745
(815,977)
Add/(less) items classified as investing activities:
Net (gain) on sale of assets
Net cash flow from operating activities
(500)
188,245
(981)
(816,958)
5. FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the entity
to credit risk principally consist of bank balances and shortterm money market deposits. The Office of the Retirement
Commissioner does not extend credit and places its cash
with high credit quality financial institutions.
Maximum exposures to credit risk at balance date are:
2005
$
2004
$
Bank balances
588,596
151,067
Short-term investments
591,783
857,432
No collateral is held on the above amounts.
43
NOTES TO THE
FINANCIAL STATEMENTS
>
CONT
FOR THE YEAR ENDED 30 JUNE 2005
The fair value of the above financial assets and liabilities is equivalent to the carrying
amounts in the Statement of Financial Position.
The Office of the Retirement Commissioner is party to letters of credit with Westpac Bank
of $10,000 (2004: $10,000).
There is no currency risk.
The Office of the Retirement Commissioner manages its interest risk by investing in
short-term deposits with high credit-rated financial institutions.
6. EMPLOYEES’ REMUNERATION
Remuneration and other benefits of $100,000 per annum
or more received by employees in their capacity as
employees were:
2005
2004
$110,000 - $119,999
0
1
$120,000 - $129,999
1
0
2005
2004
118,393
114,525
7. RETIREMENT COMMISSIONER’S
REMUNERATION
The Retirement Commissioner’s remuneration is set by the
Remuneration Authority. The Retirement Commissioner
received the following remuneration and other benefits
during the year:
Total remuneration
8. RELATED PARTY TRANSACTION
The Retirement Commissioner is a corporation sole and a Crown entity under the Crown
Entities Act 2004. The Government significantly influences the role of the Office of the
Retirement Commissioner as well as being its major source of revenue.
The Retirement Commission has entered into a number of transactions with government
departments, Crown agencies, state-owned entities on an arm’s length basis. Where those
parties are acting in the course of their normal dealings with the Office of the Retirement
Commissioner, related party disclosures have not been made for transactions of this nature.
There were no related party transactions (2004: Nil).
44
STATEMENT OF
CONTINGENT LIABILITIES
>
AS AT 30 JUNE 2005
There are no contingent liabilities at balance date (2004: Nil).
STATEMENT OF COMMITMENTS
AS AT 30 JUNE 2005
2005
$
2004
$
35,808
55,288
Between one and two years
8,208
35,508
Between two and five years
6,156
14,364
Later than five years
0
0
Total commitments
50,172
105,160
There are no capital commitments at balance date
(2004: Nil).
Commitments existed for non-cancelable operating
leases as follows:
Less than one year
45
AUDIT REPORT
TO THE READERS OF THE OFFICE OF THE RETIREMENT COMMISSIONER’S
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
The Auditor-General is the auditor of the Office of the Retirement Commissioner (the
Office). The Auditor General has appointed me, Ajay Sharma, using the staff and resources
of Audit New Zealand, to carry out the audit of the financial statements of the Office, on
his behalf, for the year ended 30 June 2005.
UNQUALIFIED OPINION
In our opinion the financial statements of the Office on pages 25 to 45:
• comply with generally accepted accounting practice in New Zealand; and
• fairly reflect:
– the Office’s financial position as at 30 June 2005;
– the results of its operations and cash flows for the year ended on that date; and
– its service performance achievements measured against the performance targets
adopted for the year ended on that date.
The audit was completed on 27 September 2005, and is the date at which our opinion
is expressed.
The basis of our opinion is explained below. In addition, we outline the responsibilities
of the Retirement Commissioner and the Auditor, and explain our independence.
BASIS OF OPINION
We carried out the audit in accordance with the Auditor-General’s Auditing Standards,
which incorporate the New Zealand Auditing Standards.
We planned and performed the audit to obtain all the information and explanations
we considered necessary in order to obtain reasonable assurance that the financial
statements did not have material misstatements, whether caused by fraud or error.
Material misstatements are differences or omissions of amounts and disclosures that
would affect a reader’s overall understanding of the financial statements. If we had
found material misstatements that were not corrected, we would have referred to
them in our opinion.
The audit involved performing procedures to test the information presented in the
financial statements. We assessed the results of those procedures in forming our opinion.
Audit procedures generally include:
• determining whether significant financial and management controls are working and
can be relied on to produce complete and accurate data;
• verifying samples of transactions and account balances;
46
>
• performing analyses to identify anomalies in the reported data;
• reviewing significant estimates and judgements made by the Retirement
Commissioner;
• confirming year-end balances;
• determining whether accounting policies are appropriate and consistently applied; and
• determining whether all financial statement disclosures are adequate.
We did not examine every transaction, nor do we guarantee complete accuracy of the
financial statements.
We evaluated the overall adequacy of the presentation of information in the financial
statements. We obtained all the information and explanations we required to support our
opinion above.
RESPONSIBILITIES OF THE RETIREMENT COMMISSIONER
AND THE AUDITOR
The Retirement Commissioner is responsible for preparing financial statements in
accordance with generally accepted accounting practice in New Zealand. Those
financial statements must fairly reflect the financial position of the Office as at 30
June 2005. They must also fairly reflect the results of its operations and cash flows and
service performance achievements for the year ended on that date. The Retirement
Commissioner’s responsibilities arise from the Public Finance Act 1989.
We are responsible for expressing an independent opinion on the financial statements and
reporting that opinion to you. This responsibility arises from section 15 of the Public Audit
Act 2001 and the Public Finance Act 1989.
INDEPENDENCE
When carrying out the audit we followed the independence requirements of the Auditor
General, which incorporate the independence requirements of the Institute of Chartered
Accountants of New Zealand.
Other than the audit, we have no relationship with or interests in the Office.
AJAY SHARMA
AUDIT NEW ZEALAND
On behalf of the Auditor-General
Wellington, New Zealand
47
>
MATTERS RELATING TO THE ELECTRONIC PRESENTATION OF THE
AUDITED FINANCIAL STATEMENTS
This audit report relates to the financial statements of the Office of the Retirement
Commissioner (the Commission) for the year ended 30 June 2005 included on the
Commission’s website. The Retirement Commissioner is responsible for the maintenance
and integrity of the Commission’s website. We have not been engaged to report on the
integrity of the Commission’s website. We accept no responsibility for any changes that
may have occurred to the financial statements since they were initially presented on
the website.
The audit report refers only to the financial statements named above. It does not
provide an opinion on any other information which may have been hyperlinked to/from
these financial statements. If readers of this report are concerned with the inherent risks
arising from electronic data communication they should refer to the published hard
copy of the audited financial statements and related audit report dated 27 September
2005 to confirm the information included in the audited financial statements presented
on this website.
Legislation in New Zealand governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
49
I’M NOT RETIRING!
I’M STARTING A NEW PAGE IN THE BOOK
>
RETIREMENT COMMISSION
LEVEL 3, 69 -71 THE TERRACE
PO BOX 12-148
WELLINGTON, NEW ZEALAND
www.retirement.org.nz
www.sorted.org.nz