Celebrating 25 Years of Scoop
Special: Up To 25% Off Scoop Pro Learn More

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


KiwiSaver continues to grow

MR No. 2017 – 42

5 October 2017

KiwiSaver continues to grow - FMA continues to push providers on customer engagement

KiwiSaver members have built up total assets of more than $40 billion dollars, equivalent to 15% of New Zealand’s GDP, since the savings scheme was established ten years ago. 2.7 million New Zealanders are now in KiwiSaver.

The FMA’s annual KiwiSaver report based on returns as at 31 March 2017 shows total assets were up $7 billion from $33.8 billion in 2016. Investment returns of $2.7 billion were more than double those of 2016, and are close to the previous record $3 billion, reported in 2015.

The transfer of members between schemes continues to be a theme of the report, and a key focus for the FMA. For the second year in a row, the number of transfers, 172,017, is higher than new members joining, 154,531. This trend is likely to continue, and the FMA remains concerned that people are not getting the help they need to ensure their decision to transfer to a new provider is a good one.

Rob Everett, FMA Chief Executive said: “We have improved our guidance on KiwiSaver sales and advice to remove obstacles that prevent providers helping their members make good decisions about KiwiSaver. We have also partnered with providers on field trials to see if behavioural insights help them to better connect with their members. This is all part of pushing and encouraging providers to put solid effort into member engagement.”

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

The annual statement KiwiSaver members receive from March 2018 will, for the first time, show the dollar amount of the fees they pay. Research suggests this will help members understand their KiwiSaver fees more clearly.

The FMA has encouraged providers to also disclose fees as a percentage. This would make it easier for consumers to compare different KiwiSaver funds. Ahead of this, the report for the first time sets out the average fees per member in dollar terms. The average management fee per member was $97.80, reflecting an average balance of just under $15,000. The average administration fee was $30.30.

The report also updates information about what default KiwiSaver providers are doing to meet their responsibilities to address the financial literacy of their members. This is measured by the number of default members making an ‘active choice’ either to stay in a default fund or switch to another fund. Overall, and for four of the nine providers, the results are worse and the FMA is concerned.

Mr Everett said, “We understand that engaging with default members can be difficult. But the lack of progress in this area by the default schemes is disappointing. Especially when the income from fees paid by default members has increased to $31.5 million, and providers still seem to have little trouble engaging other providers’ members to get them to transfer.

We have written to the chief executive of each default provider, seeking their commitment to meet their obligations to their default members. At the very least, we expect them to deliver on what they said they would do in their tenders to the Government seeking default status. Or, if they have tried that and it didn’t work, to try something more effective.”


© Scoop Media

Advertisement - scroll to continue reading
Business Headlines | Sci-Tech Headlines


Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.