Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Commerce Minister Foss adds to KiwiSaver default funds

Commerce Minister Foss beefs up KiwiSaver default fund numbers

By Paul McBeth

March 28 (BusinessDesk) - Commerce Minister Craig Foss has beefed up the number of KiwiSaver default providers that members are automatically enrolled into when they sign up to the government sponsored scheme.

Westpac Banking Corp., Bank of New Zealand, KiwiBank and Grosvenor Financial Services will join AMP Financial Services, Australia & New Zealand Banking Group, Mercer and Fisher Funds from the start of July in becoming default providers for the next seven years, Foss said in a statement. Fisher Funds joined the existing providers after buying Tower’s investment arm.

KiwiSaver was set up in 2007 as a means to address the country’s woeful savings rate, which has been undermined by an overinvestment in residential property. The government began the tender process for the default providers last year when it settled on keeping the existing investment mandate to manage the funds conservatively, fending off attempts to implement a tiered approach based on an investor’s age. About 22 percent of 2.28 million KiwiSaver members are in default funds.

“The purpose of the default funds is as a temporary holding fund,” Foss said. “They have a conservative investment approach aimed at providing stable returns and maintaining and building confidence in KiwiSaver while members consider the best fund for them.”

The default funds will have to offer investors education encouraging greater engagement with their portfolio, which will include communication campaigns, seminars, financial advice and online tools, according to a questions and answers document accompanying the release.

The new default funds are expected to have cheaper fees than the current setting, particularly for smaller balances, with the average dragged down by Grosvenor’s offering. The government cited an average annual fee of $56 for a typical fund with $7,000, compared to the current average fee of $69. The median annual fee will be $64.

Grosvenor, which bought Fidelity Life’s KiwiSaver scheme last year, is offering the lowest fees among the new default providers with variable fees of 0.38 percent, no fixed fees for funds with less than $10,000 and $30 fixed fees for funds with more than $10,000. KiwiBank will offer variable fees of 0.59 percent, with a minimum annual fee of $40, and no fixed fee.

In a 2012 discussion document on the default providers, Ministry of Business, Innovation and Employment officials sought a better alignment between the interests of fund managers and investors, which they said had an “inherent misalignment” between investor interests to maximise returns over the long term and fund managers, who want to increase funds under management, typically by focusing on short-term gains.

In 2010, the government-appointed Savings Working Group’s pressed for tax reform as a means to improve the nation’s savings rate, and found people under the age of 45 don’t have security for pension income because national superannuation can’t survive in its current form.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Food: Govt Obesity Plan - No Tax Or Legislation

Speaking to Q+A’s Corin Dann this morning, health minister Jonathan Coleman said tackling obesity was at the top of the Government’s priority list, but there was “no evidence” a sugar tax worked, and further regulation was unnecessary. More>>

ALSO:

Treasury Docs On LVR Policy: Government Inaction Leads To Blurring Of Roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. More>>

ALSO:

Final EPA Decision: Tough Bar Set For Ruataniwha Dam

Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the dam has far less of an impact on the Tukituki river." More>>

ALSO:

"Don’t Give Up":
End Of Kick-Start Hits KiwiSaver Enrolments

ANZ said new enrolments for the ANZ KiwiSaver Scheme had dropped by more than 50% since the Government announced an immediate end to the $1,000 KiwiSaver kick-start incentive in the Budget last month. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news