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

 


CORRECT: Foss beefs up KiwiSaver default fund numbers

CORRECT: Commerce Minister Foss beefs up KiwiSaver default fund numbers

(Includes ASB as existing default fund provider in 2nd graph)

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, ASB Bank, 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

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news