KiwiSaver providers should be required to disclose a range of extra information in their annual statements, including the total fee in dollar terms a member has paid during the year, the Ministry of Business, Innovation and Employment is suggesting.
It has released a consultation document outlining proposed changes to annual statements for KiwiSaver, superannuation and workplace savings schemes.
In it, it says that many New Zealander do not make good decisions about their retirement savings – such as staying in default funds when another type of fund might be a better option.
While they remembered getting their annual statements, they wanted more information, such as what their projected final balances might mean in terms of a weekly income.
“Given the high levels of readership of annual statements, we believe there is an opportunity for them to be used as a decision-making tool to prompt investors to consider how their current investment choices are impacting their retirement savings goals,” MBIE said.
It is proposing that statements be required to include a saver’s current balance, total fees paid over the year, projected retirement lump sum and income, the total amount the account grew over the year, transaction figures showing money going in and out of the account and the question: How do I increase my retirement income?
“We propose showing members the fee impact in real dollar terms on their statements; that is total fees paid including management and administration charges and performance fees and other charges. The FMA’s consumer research into KiwiSaver annual statements also showed that there is consumer appetite for information about fees: 39% of those interviewed wanted information about how fees are calculated and 37% wanted to see fees displayed in a dollar amount.”
The total fee calculation would be made in accordance with the disclosure of other fees under the Financial Markets Conduct Act, MBIE said. That would include management fees, performance-based fees, other charges and a total.
“Where fee estimates for underlying funds are used, or where it is not possible to estimate fees, the statement should include a footnote explaining this and referring the reader to the product disclosure statement or fund update for full details of how estimates are arrived at, or which funds have information omitted,” MBIE said.
MBIE said it was also considering whether other information would be required such as the investor’s retirement savings history, information on the main types of funds and the investor’s actual investment mix.
The goal is for the changes to be implemented in time for the 2017 KiwiSaver annual statements.