Hawes: Slow KiwiSaver transfers unfair to members
8 April 2019
Financial Advisor and Summer KiwiSaver Investment Committee Chair Martin Hawes says there is no reason KiwiSaver members should have to wait more than a month to shift their money from one provider to another and wants the Government to change the rules.
Current legislation requires that KiwiSaver providers effect transfers within certain periods – 10 days when a member transfers out of a default fund and 35 days from a non-default fund.
“Why the difference?” Hawes asks. “If KiwiSaver providers can transfer from one type of fund within 10 days there is no reason they can’t do it for other types.
“It’s ridiculous that providers can hold on to money for five weeks when they should be able to make the transfer in five days. After all, it’s not their money.”
Hawes says this is more important now than ever because KiwiSaver is effectively a transfer market.
“The KiwiSaver land grab is over – 2.9 million people have signed up to the scheme. We’re now in the business of educating people about the importance of being in the right fund and encouraging them to move to a provider who has the best fund for them, but the regulations are completely out of step with this.”
He believes the number of people wanting to transfer from one KiwiSaver provider to another will continue to increase as account balances grow and people become more aware and search for better investment performance.
“It should be done quickly and efficiently. I don’t believe you can justify the extraordinarily long time that providers have to transfer the money for people who have decided to switch. It is unfair on KiwiSaver members who are trying to do the right thing and wanting to move to a more suitable fund.
“Banks can transfer money in a day (at most). KiwiSaver transfers are probably a bit more complicated but five days seems reasonable; five weeks is certainly not reasonable.”
Hawes believes there is little or no reason for there being a difference between default funds and non-default – both could be the same and both should be a shorter time.
“KiwiSaver is supposed to connect people to their money but this can be obstructed when some providers are allowed to drag their feet.”