KiwiSaver schemes have safety nets, says BT
March 28 2008
KiwiSaver schemes have safety nets, says BT Funds Management
Being unsure about the safety nets surrounding superannuation means that some potential KiwiSavers are deferring joining a scheme through fear that their KiwiSaver provider might collapse and their contributions be lost.
However, Fiona Oliver, Chief Operating Officer of BT Funds Management, the developer and manager of the popular Westpac KiwiSaver Scheme, points out that every KiwiSaver scheme is subject to rigorous regulation and monitoring and must have at least one independent trustee.
“Under section 116 of the KiwiSaver Act 2006, schemes are established and governed by a Trust Deed and have at least one independent trustee who ensures that the scheme is operated according to the Trust Deed and the law (including the KiwiSaver Act, Securities Act and the Securities Regulations),” says Ms Oliver.
Westpac KiwiSaver’s independent trustee is New Zealand Guardian Trust, which holds all members’ contributions and assets in accordance with the terms of the Trust Deed.
Ms Oliver notes that some new or cautious KiwiSaver investors are also experiencing anxiety due to the current market volatility and talk of recession. Yet, she says, one of the most effective ways to reduce risk is to invest over the long term – which is of course a feature of KiwiSaver for many investors.
“Time is an investor’s most valuable asset. It neutralises market volatility. For example, over a long time period of seven years or more, the volatility associated with risk asset classes such as shares is substantially reduced.
“It’s also important for people to choose investment options that suit their investment appetites,” she says, pointing to the Westpac KiwiSaver Capital Protection Plan (CPP), which is designed to protect contributions to a CPP Fund to the maturity of that Fund. “CPP was deliberately developed for those who would be anxious if their savings went down or fluctuated. Subject to certain circumstances, CPP protects members’ contributions, plus whatever the government and their employers have contributed. This is a unique option because it also offers the potential for higher returns through its exposure to shares.”
The Westpac KiwiSaver Scheme also offers four other funds. Together with the CPP, its Cash Fund and Conservative Fund suit people seeking lower levels of risk and more stable returns. Its Balanced Fund and its Growth Fund are for people comfortable with fluctuating markets but who seek higher returns. Ms Oliver anticipates the conservative options could attract more investors in the current investment climate.
BT manages and administers around $2.0 billion of funds under management, and provides a wide range of investment options, including funds managed by its own teams as well as alliances with global investment managers. Westpac purchased BT in 2002.
See www.westpac.co.nz/kiwisaver for an investment statement and further information including a personal risk profile.