11 Sep 2014

Few options for aging investors - NZIER

7:21 am on 11 September 2014

A leading economist says a lack of fixed-interest investment options will significantly hurt the pocketbook of a rapidly aging population of investors.

Speaking at the Shareholders Association's annual meeting, New Zealand Institute for Economic Research prinicipal economist Shamubeel Eaqub said something needs to be done urgently.

He said the lack of corporate bonds and other debt offerings in the local market means investors have little other choice but to place their investments in low-interest bank savings accounts.

"Look, the innovation we're seeing in the financial sector with things like crowd-sourcing and crowd-funding, they may be helpful," he said.

"But the traditional channels of strong and deep bond markets, having a banking sector that is as interested in lending to businesses and mortgages because the weight of money is there, will be much more fruitful, and will continue to be, in my view, the strong drivers of growth in the future.

He said he was surprised that New Zealand's debt market was not in a healthier state.

"We need to have a healthy debt market heading into a much older population. Having a good liquid bond market is going to be critical to provide the income that a lot of retirees will seek."

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