An industry body argues the biggest risk to KiwiSaver is over-zealous regulation, rather than fund manager behaviour.
WSNZ chief executive Bruce Kerr says the industry body was monitoring “how sweeping the changes will be”.
Under proposed changes announced by Commerce Minister Simon Power late in April, all KiwiSaver providers would have to adhere to the same rules applied to default schemes – in particular the requirements for more regular reporting and stronger trustee oversight.
Kerr said while the organisation supported the broad thrust of proposed KiwiSaver changes but it was opposed to “regulation that simply adds compliance cost for no member value”.
“We believe there is currently no systemic problem with KiwiSaver. In fact in our view, the biggest risk KiwiSaver faces is that overly zealous regulation is rolled out without adequate and effective engagement with all stakeholders to ensure those changes will be optimal.”
He said, for example, many existing employer superannuation schemes and master trusts continued to operate effectively under current regulatory arrangements and could face unnecessary disruption if the proposed new regime was extended to incorporate them.
While Power has excluded non-retail KiwiSaver schemes and other employer-based savings schemes from the proposed changes, he said that decision could be revisited later.
According to Kerr, the Ministry of Economic Development (MED) has indicated the KiwiSaver changes will be included in a new piece of legislation expected to be drafted by August.
“Initially, we thought the changes would be part of the Securities law review.”
WSNZ, which has about 130 representing about 90% of the industry, was also drafting a “high level policy” document for presentation at its conference to be held at the end of August in Christchurch.
Kerr said the policy was unlikely to include a view on the banning of commissions on KiwiSaver products.
“But we’re certainly starting to have conversations about [commissions],” he said.