There are calls to streamline the process of transfers between KiwiSaver schemes, to reduce the burden on providers and members.
KiwiSaver transfers are in the Financial Markets Authority’s sights. It has requested information from all providers about transfers in the last quarter of last year, broken down to the number of days a transfer took to process.
Binu Paul, founder of SavvyKiwi, said there were problems with the current situation.
“There is too much lag between when an investment decision to move is made, and when their account balances actually get transferred, with some taking more than a month,” he said.
“That is assuming the process goes smoothly. I have seen instances where some users on SavvyKiwi have made a decision to move and even received the sign-up pack from the new provider, and they have simply sat on it for up to three months or more, til we have sent them a follow-up email.
“The issue here is about friction. When it comes to client on-boarding, we still have too many manual steps to go through to make things happen. For example, having to manually walk into a storefront with a copy of your ID and utility bill for identity and address verification. If you want people to take action, you have to take away as much friction as possible.”
He said providers also had to go through a lot of time-intensive activities that were ultimately redundant.
Many of the ID requirements were a result of anti-money laundering rules, he said.
“Having said that, you have to remember that KiwiSaver is like the reverse of a ‘gated-community’. Members are welcome to come in but once you are in, you are locked in till a certain time. There is not much mischief you can get up to during that time in terms of money-laundering.”
He said that should make it possible to make changes. “Once you are in a KiwiSaver scheme, after having gone through a check, when transferring to another scheme, do you need to go through the same checks again? Can we use a Government-maintained central database of individuals that is a single source of truth when it comes to personal IDs and use that as a base for the transfer process?”
He said some of the checks seemed better suited to be deployed when people wanted money out, rather than when they transferred.
Ana-Marie Lockyer, general manager of wealth products and marketing at ANZ, the country’s biggest KiwiSaver provider, said all KiwiSaver providers reported against the requirement that member switches happened within 35 days, or 10 days for members of default schemes.
“We comply with this, assuming we have all the necessary information. We would support any moves to have the same timeframe for transfers whether someone is a member of a default or other KiwiSaver scheme.”
READ MORE: FMA: No hard lines on KiwiSaver incentives