The Government is reducing the number of default KiwiSaver providers from nine to six.
Simplicity and Smartshares (NZX) will join existing default providers - BNZ, Booster, BT Funds Management (Westpac) and Kiwi Wealth.
Major players in the market - AMP, ANZ, ASB, Fisher Funds and Mercer will no longer be default providers.
KiwiSaver members who don't actively choose an investment fund are put in a default fund. Currently there are around 381,000 people in this position, or 12% of KiwiSaver members.
The Government reviews default providers every seven years. Eleven providers partook in the tender.
The new set of default providers will charge lower fees than is currently the case, and not charge a fixed annual or monthly fee.
Default funds will also switch from being conservative (more weighted towards bonds and cash than equities) to balanced.
And default providers will be banned from investing in fossil fuel production and illegal weapons. These changes were announced last year.
Default providers are obligated to engage with their members to help them make informed decisions about their retirement savings at key points.
KiwiSaver members who haven't actively chosen to be in a default fund, and whose fund managers haven't been reappointed, will have their investments moved by the Inland Revenue to one of the new default managers.
Members whose managers have been reappointed will stay with those managers, but have their investments moved from conservative to balanced funds.
KiwiSaver members in default funds won't have to do anything as the change is made.
It's important to note that while AMP, ANZ, ASB, Fisher Funds and Mercer will no longer be part of the default KiwiSaver scheme, they will remain regular KiwiSaver providers. Their customers who have actively chosen to be in a fund won't be affected at all.
As for the tender process the Ministry of Business, Innovation and Employment ran, proposals were assessed against a set of criteria, which included a 60% weighting on fees.
The remaining criteria included their ability to deliver the investment product (including the new requirements such as the need to exclude investment in fossil fuels production), manage transitional arrangements, provide a good customer experience for their members, and the provider’s organisational structure and financial standing.
Below is a table showing fee changes. Fees are calculated as a percentage of a member’s balance over a year. So, someone with a $10,000 balance, who is charged a 0.3% fee, will pay $30 over a year.
| Provider | New fees | Old fees |
| BNZ | 0.35% | 0.50% |
| Booster | 0.35% | 0.38% |
| BT Funds Management (Westpac) | 0.40% | 0.47% + $1.83 monthly fee |
| Kiwi Wealth | 0.37% | 0.52% |
| Simplicity | 0.30% | |
| Smartshares (NZX) | 0.20% | |
| ASB | 0.40% + $2.50 monthly fee | |
| ANZ | 0.44% + $1.50 monthly fee | |
| AMP | 0.39% + $1.95 monthly fee | |
| Fisher Funds | 0.52% + $1.95 monthly fee | |
| Mercer | 0.47% + $2.25 monthly fee |
47 Comments
The idea of default investment itself is not a healthy one. At the time of signing up, the member should be compelled to pick their provided, after studying the relevant strengths and the scheme they want to be in.
That is a better way to educate one in investment practices.
People in default funds, by definition, have not made any choices.
If moving them to a different provider forces some people to wake up and take their financial future into their own hands by making choices, that's a good thing.
The NZ Super Fund has a very specific mandate and time frame for its investment. Any kiwisaver setup that involved the super fund would naturally be a different beast, not least because they would have to deal with retail customers (lot of overhead doing all that customer support and management systems) but they'd also have to allow early withdrawals for house purchases etc, as well as different dates of people withdrawing their funds.
"People in default funds, by definition, have not made any choices."
That is a big assumption. Some may well have decided on those funds for varying reasons. I know a few people in the default solely to claim the Govt contribution. Other than that they would not be in KS at all. They prefer default conservative as they want to ensure they keep the balance. They manage growth with other investments.
I don't disagree with the bit about people waking up.
But it does concern me that the Govt is unilaterally messing with peoples personal finance. If they can effectively step in and act on behalf of someone, what is stopping them doing that to any other Kiwisaver provider/member? Maybe the Govt determine everyone in X's growth fund is being fleeced, so move them to Y's Conservative.
He's saying these people joined up solely to get the government contribution, and have 0 interest what happens to their kiwisaver beyond that.
Which is a truly stupid attitude to take, anyway.
There are providers that have life stages accounts that automatically reduce your risk exposure as you age. 1 hour spent joining one of those, and never spending another second on KiwiSaver ever, could be a difference of $50k or more when you retire.
Hmmm....seems like default providers are obligated to work with and look after their customers. My current provider has been dumped as one of the default providers, so they were obviously not prepared to come up to scratch. I’ll now shift to one of the better outfits.
Time to beef up Kiwisaver. A. Make it universal. B. Contributions to progressively rise.
New Zealanders would be owners, not borrowers.
Eventually (30 years) it will replace super. And we will not have to endure the short term thinkers uselessly debating 65 or 67.
Personal I don't have Kiwisaver and my company puts their contribution into a non-kiwi saver scheme. I also invest in shares privately, I would prefer if all of was managed by me, as opposed to paying fund managers. If I leave my job I can draw the money down when I want, If I choose to retire at 50 I can, I don't have apply to get my money, no need to apply for a payment holiday if I wish. I don't have the government changing the rules on a whim. I do loose the $500 tax break, but as far as I am concerned its as small price to pay to keep the governments sticky fingers a little bit more out of my life.
Also if they make Kiwisaver universal then next logical step will be to dump NZ super.
Or alternatively you could not be so negative on the scheme and realise is is a forced savings program that the public as a whole is not capable of doing for themselves. Just like speed limits. We are not all capable of driving sensibly so we agreed the govt will make rules to control speed. The $500 tax break is actually a 50% Govt guaranteed return on your $1000 investment. Do your own thing if you want with your other savings but that seems like a silly little win to turn down. Yes, ideally everyone would have autonomy and take personal responsibility but that's not how the model coddle society works..
It's not under "effective control" of the government, any more so than your private bank account with a big 4 Aussie bank is.
Any government that tried to raid or take control of KiwiSaver would have a huge electoral backlash.
> And you would happy with that state of affairs for a measely 10 bucks a week??
You somehow manage to acknowledge, and then immediately ignore, compounding investment returns.
The ten bucks a week is the government contribution. Your own contribution is more likely $100 a week, so the government gets control of your fund for only 10% of the input.
And they do have control. At the moment they dictate when you can get your hands on it. Just look overseas to see how common means testing is of government welfare for the elderly. It will come here too, and with the increasing cost to the taxpayer I would say there will be a voter backlash if they don't introduce it here again.
My prediction, a 30 year old today can expect their kiwisaver balance to be compulsorily converted to an annuity upon retirement, and that annuity to be included in means testing.
I take the middle road and invest the minimum 3% to get full employer matching and government contribution. Above that 3%, I save and invest my money elsewhere. I expect to still need quite a lot of money after 65 so it's not a big deal that some of it is locked up until then, and if I retire early it will be funded by my other investments.
Interesting comments, and one needs to remember kiwisaver is a scheme constructed by government, and I guess they are entitled to tweak the scheme to suit their own objectives....but. Here we are after a massive worldwide financial upheaval and with many governments printing money with apparently no adverse consequences. And just as interest rates and inflation showing signs of finally moving upwards, with all sorts of possible consequences for our small nation of enthusiastic borrowers, our all wise gummit has decided to push the ignorant masses away from conservative repositories of THEIR money, into the type of "growth" investments likely to be adversely affected by revaluation of generally overpriced equities......what could possibly go wrong when our so commercially smart Cabinet Ministers get involved in second guessing the economy?
Or maybe it occurred to them and they spent 5 minutes researching? Or perhaps someone in treasury has a vague awareness of the huge number of ESG funds that are readily available? Simplicity for one already invest in such funds.
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