Green Party proposes 'public option' for managing KiwiSaver through NZ Super fund to save tens of thousands of dollars in fees

YES , what a brilliant idea , the Govt Super can be the default provider . This works in places like Singapore , where people can either elect to have the Singapore Compulsory super managed by a Private set-up or the State set-up . I am sure there are other countires where it works. 

Yet to see any party offer self management.

National best watch out for the Greens.... they are starting to get some real traction.  Some of their stuff is a bit wishy washy, however they have a widening appeal that crosses the political spectrum.  National does itself no favours with its mine it or tarseal approach to solving problems.

yep - if you want NZ to end up being a group of quaint little sparsely populated islands, isolated from any form of western  alliance and a lifestyle akin to the stone age then   2 tix4green !

Greens main issue is they still have some absolutely ludicrous c**p to go with some otherwise reasonable policy.

That their official position is to cull 20% of the dairy and sheep stock of the country should be enough to condemn them by itself.

However I wish they wouldn't make a reasonable proposition sound bad by including the KiwiBank references -  definately don't want my super managed by a bank that makes a $40 mill loss per annum.

Rather than spending all that extra public money on being a provider so that the public can, er,  save money (?) -  couldn't the Govt/FMA flex their muscles on the "reasonable fees" part of the KiwiSaver legislation?

If there was a clear definition of what "reasonable" is, then the providers that charge too much would have to cut their cloth.  Or stop being a provider.  Lower fees for the public, no cost to Govt.   

It does not matter what the fees are. The thing that matters is what the long term after fee return is. Obviously if you can get good performance and low fees that is a good thing but focussing on fees only misses half the point. A very low cost manager wont be able to do much more than buy government stock on behalf of investors. Might suit the Greens as it would provide them with a steady flow of captive cash to do dopy things with.

Norman also seems to assume you can manage money with no costs. The providers we have now wont have made much money so far because of their set up costs and the first year or two when they had all the infrastructure to handle  hundreds of thousands of accounts but only a few dollars in each account. They will be starting to do OK now as uneconomic managers are absorbed by the bigger ones.

Kiwibank dont have a wealth management unit at all and the Super Fund is probably perfectly happy with its one client. It has no way of dealing with a million customers. And just exactly what has Kiwibank done for banking? Certainly does not seem to have worked as a brake on bank profitability in NZ.

I can only speak from experience - years ago we applied for a mortgage from Kiwi Bank, within few minutes they decliend our application.  Went across the road to two Australian banks, both approved our loan and we have been with them ever since.  So I am one of those who contrubuted to their big fat profits  - I guess they took a risk on me - so what's fair is fair.  I'd have gone with Kiwi Bank but my experience is that they are next to useless!

FYI from Greens on any guarantee of money invested via NZ Super Fund

“Our proposal to offer a public KiwiSaver fund to lower costs and fees does not come with any Government guarantee,” Green Party Co-leader Russel Norman said.

“If any KiwiSaver provider went broke, the Government may have to respond as National did when AMI got into trouble. Our public KiwiSaver fund would have no more implicit guarantee than any other provider.

“What I can guarantee is that by reducing KiwiSaver fees and costs significantly, New Zealander’s nest eggs will grow considerably.”

Australia’s fee-cutting superannuation reforms announced in September will increase savers’ nest eggs by A$150,000 for a 30 year-old worker earning an average full-time wage.

“The Australian Government is enhancing the savings of Australians significantly through economies of scale. Why wouldn’t we do the same for KiwiSavers here?” said Dr Norman.

“A public KiwiSaver fund is a better option to help 1.8 million New Zealanders saving for their retirement than selling state assets to the few who can afford to invest in them.”

The Green Party will create a public KiwiSaver fund to lower costs and boost people’s nest egg on retirement. To achieve the necessary economies of scale to achieve this, the fund will be managed by the Guardians of the New Zealand Superannuation Fund — a $16 billion fund. The front-end provider could be Kiwibank or the Inland Revenue Department, as recommended by the Government-appointed Savings Working Group, depending on who can do it most efficiently.

“The best way to ensure KiwiSaver providers don’t get in to a situation where they’re too big to fail is to regulate the industry well,” said Dr Norman.

“Without good prudential oversight and reporting, we could end up with another AMI situation where the Government has little choice but to bail out poorly regulated KiwiSaver providers.

“One of the first tasks of the new Financial Markets Authority (FMA) will be to ensure KiwiSaver providers are reporting their fee and cost structures in a fully consistent and transparent way.

“The FMA can also issue clear parameters for performance-based fees, such as ensuring they’re measured on an after-tax after-cost basis, and include clawback provisions to recoup poor performance.”