Right Problem, Wrong Solution: InvestNow Warns On National Multi-KiwiSaver Plan Complexity, Costs

The National Party proposal to open up KiwiSaver to multi-scheme membership has exposed a major flaw in the system that the market has already solved, according to InvestNow general manager, Mike Heath.

Heath says while National has rightly pointed out the risks of investing via a single KiwiSaver scheme, InvestNow and other providers already offer wide fund choice in a simple administrative wrapper.

“While we applaud National for identifying a long-known issue with the KiwiSaver system, innovative schemes such as the InvestNow KiwiSaver Scheme have solved the problem without the need for government intervention,” he says. “Furthermore, we are able to give KiwiSaver members access to investments from about 15 fund managers from the same administrative system – avoiding the costs and complexity involved in reporting across multiple schemes.”

Under the National policy, KiwiSaver members would be able to split contributions across up to three schemes, imposing extra administration costs on both members and the system as a whole.

Much of the complexity, expense and risk would fall on the Inland Revenue Department, which channels most contributions to KiwiSaver schemes.

However, Heath says members of more than one scheme would also lose the benefit of consolidated KiwiSaver reporting where all costs and investment returns can be viewed in context.

“The National Party emphasis on ‘flexibility and choice’ in KiwiSaver is on the money,” he says. “But the proposed policy is more likely to introduce confusion and expense when cost-effective solutions already exist.”

Appendix

About the InvestNow KiwiSaver Scheme:

• The InvestNow KiwiSaver Scheme now has 40 managed funds in the InvestNow KiwiSaver Scheme:
  • Aggressive funds (2)
  • Growth funds (8)
  • Balanced funds (4)
  • Conservative funds (3)
  • Single-sector funds (23)
• From 15 fund managers:
  • Antipodes
  • Castle Point
  • Clarity
  • Fisher Funds
  • Foundation Series
  • Generate
  • Harbour
  • Mercer
  • Milford
  • Mint
  • Pathfinder
  • Russell Investments
  • Salt
  • Smartshares
  • Te Ahumairangi
• The management fees for the InvestNow KiwiSaver Scheme funds range from 0.03% p.a. to 1.50% p.a.
• If a combination of funds are selected, the investor will pay the weighted average fee, not the cumulative total.
• Other fees may be charged, in addition, depending on what funds are selected, such as buy/sell spreads and performance fees.
• The InvestNow KiwiSaver Scheme does not charge any KiwiSaver administration fees

InvestNow

InvestNow is a Wellington-based online investment platform and is a member of Apex Group.

InvestNow is a Financial Service Provider (FSP534448).

InvestNow provides serious investors, who know what they want to do, the ability to directly invest in a compelling range of investment options from both NZ and Global investment experts.

Without the need for a middleman, and our no-advice direct investment service, investors can manage their portfolios investing in PIE funds, Listed PIE Funds (Exchange Traded Funds – ETFs), unlisted Property Funds, Australian Unit Trusts and Bank Term Deposits, 24/7.

In addition, the InvestNow KiwiSaver Scheme, provides Kiwis with the ability to build their own KiwiSaver portfolios from a range of fund managers and their funds.

InvestNow provides investment accounts for NZ Individuals, Joint Accounts, Family Trusts and NZ Companies.

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