KiwiSaver Simplicity to make investment in social housing

As more investors seek social and financial returns on their retirement savings, a growing number of KiwiSaver providers are funding the Community Finance Scheme. The scheme makes investment in housing projects possible through community bonds and plans to raise NZ$100 million for building new affordable and social housing.

A KiwiSaver provider Simplicity has pledged NZ$20 million to the bond scheme Aotearoa Pledge after investments from Generate, Caresaver, and ANZ. It is the biggest contribution till date, bringing investment in the bond scheme to NZ$71 million.

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Simplicity is a not-for-profit business, which runs entirely online, so there are no hidden fees or commissions. Simplicity funds are completely diversified, with over 3,000 investments in 23 countries, and 15% of fees go to assist New Zealand charities through the Simplicity Charitable Trust.

Low-cost financing offered by affluent ethical investors and organisations is a crucial component of the idea, which aims to break the community housing sector’s heavy reliance on government funds.

By investing in community finance bonds, KiwiSaver providers will make a profit for their investors, and their money will go towards the construction of affordable and social housing. Investors will get a return in the range of 2-2.5% p.a. from the investment.

Benefit of housing through Kiwi investments

Simplicity chief executive Sam Stubbs stated that Kiwi investors would not want to miss the opportunity to get safe and secure homes while also making good returns. KiwiSaver funds have a large-scale and long-term investment model, which is optimal to create more homes on a large scale for helping families and others in need, he added.

According to Stubbs, KiwiSaver funds and organisations such as NZ Super, iwi, and ACC have a combined investment portfolio of more than NZ$150 billion, making them crucial in the drive to develop more homes, and address the housing crisis. Generate KiwiSaver Scheme, ANZ Bank, and Pathfinder Asset Management are among the other corporations and investors, who have committed NZ$10 million each to the Aotearoa Pledge.

Shamubeel Eaqub, Director at Simplicity, stated that Aotearoa Pledge had pointed the power of finance to the deteriorating housing crisis. He added that the housing crisis is too enormous to be addressed by philanthropic funds alone, but if regular Kiwis investments can be used to benefit New Zealanders' housing, a difference can be made.