KiwiSaver

Constant legislative changes to KiwiSaver are detracting from the original message behind the scheme of savings awareness and financial literacy.

The Association of Superannuation Funds of New Zealand (ASFONZ), which promotes workplace savings, held two forums recently, in conjunction with Inland Revenue, which involved nearly all providers of KiwiSaver schemes.

The Auckland and Wellington forums discussed issues of concern among providers to allow the smooth rollout of KiwiSaver changes and workplace savings schemes.

There was strong feedback from providers that they are now looking to the government for a period of regulatory stability for KiwiSaver.

“Constant rule changes have been costly for providers, ultimately impacting on KiwiSavers through direct costs and through the extent of resources that providers have had to commit to accommodating the changes,� ASFONZ chair David Ireland says.

He believes providers have had to meet considerable compliance costs which deliver “little or no benefit to existing KiwiSaver members�.

While Ireland believes the government should not rush further changes, he believes it does need to address concerns about some unintended consequences of changes already made, and remove anomalies from the original KiwiSaver provisions.

These include the risk of consumers losing their first home buyers’ subsidy if they reduce their member contribution from the current 4% to the 2% rate from April 1, 2009.

“Building certainty for KiwiSaver members is extremely important at present, and not only because of current investment market underperformance.

“It is also because constant rule changes since KiwiSaver was first announced have limited the industry’s ability to develop value-add enhancements for consumers,� he says.

KiwiSaver was the only managed fund sector to grow in the three months to September this year, according to new figures published by the Reserve Bank.The latest Reserve Bank managed funds survey put total KiwiSaver funds under management at almost $1.8 billion at the end of September compared to just over $1 billion at June 30, 2008.

Over the same three-month period superannuation funds under management, other than KiwiSaver, fell by almost $1.3 billion to $18.6 billion and had shrunk by close to $4 billion in the 12 months to the end of September 2008.

The Reserve Bank figures also showed over the September quarter: life insurance funds dropped from $8 billion to $7.9 billion; unit trusts and GIFs were down almost $800 million, and; other managed funds (including charities and private funds) holding steady at about $16 billion.

In total, New Zealand’s managed fund sector had declined by almost $1.5 billion in the three months since June this year and was off by approximately $8 billion from the high point of $66.4 billion under management as at September 2007.

The Reserve Bank figures show KiwiSaver funds have invested roughly 60% in New Zealand assets with the rest offshore. Almost half of the KiwiSaver funds were invested in New Zealand cash and fixed interest assets with only $142 million placed in local equities and unit trusts with a further $79 million put into property.

The $700 million invested globally by KiwiSaver funds was not broken down by asset class in the Reserve Bank figures.

The Reserve Bank included KiwiSaver funds for the first time in the September managed funds survey. The report excludes KiwiSaver schemes with less than $500 million under management, however, the Bank said its statistics cover 95% of the market.

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The National Party’s proposed changes to KiwiSaver have some pros and cons for employers, consultancy firm Aventine says.
The negatives are that KiwiSaver rules keep changing meaning more work for employers to comply with the scheme. The fact that there have already been changes such as to salary sacrifice, within the scheme’s first year of operation have been a contentious point.

The key proposed changes in this area are to unwind the changes Labour made to the Employment Relations Act to stop employers from reducing remuneration because of KiwiSaver.

National is also proposing to make the two-plus-two option a permanent feature. Employees will be able to choose making contributions at either two or four or eight percent.

A key issue with this change is that the resulting benefits for people putting money into KiwiSaver will be lower at retirement age than under the current scheme.

“The resulting benefits that will emerge will be lower and in many cases, inadequate.

This will increase the likelihood of future changes, or put pressure on employers to put in place supplementary arrangements,� Aventine says.

The other concern for employers is that National is proposing to limit the compulsory employer subsidy to 2%, meaning it won’t increase after April 2010. Also it plans to eliminate the employer tax credit.

Aventine says this creates problems for employers that have adopted up to now, a more generous approach.

“Under National’s policy, any employer contributions above 2% will become taxable and therefore contributions will need to be split between those that are taxable and those that are not.�

The range of returns from KiwiSaver funds is very wide according to the first performance report from research house Morningstar.This survey groups KiwiSaver options according to their mix of income and growth assets, known as their ‘asset allocation’. This is one of the most important decisions to make when saving for retirement income.

The survey does not include all KiwiSaver providers. Organisations like Mercer, Gareth Morgan Investments and Huljich did not participate.

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Default Options
Multisector
– Conservative
– Moderate
– Balanced
– Growth
– Aggressive
Single Sector Options
– Cash
– Fixed Income
– Property
– Australasian Equity
– International Equity
– Miscellaneous

KiwiSaver Performance Survey – Returns to 30 September 2008
Fund Name	Underlying Investment Manager	3-month %	6-month %	1-year %
Default Options
AMP KiwiSaver Default Fund	AMP	0.86	3.41	3.45
ASB KiwiSaver Conservative Fund (Default)	ASB Group Invmts	0.95	1.59	1.47
AXA KiwiSaver Income Plus	AXA Asia Pacific	-1.23	-0.72	-2.71
ING KiwiSaver – Conservative Fund	ING	1.1	1.34	2.36
TOWER KiwiPlan-Cash Enhanced	Tower	0.18	1.45	3.36
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Multisector Options
Conservative
AMP KiwiSaver Default Fund	AMP	0.86	3.41	3.45
ANZ KiwiSaver – Conservative Fund	ING	1.67	1.87	2.39
ASB FirstChoice KiwiSaver Tracker Conserv Fund	ASB Group Invmts	0.83	1.48	1.22
ASB KiwiSaver Conservative Fund (Default)	ASB Group Invmts	0.95	1.59	1.47
Asteron KiwiSaver Conservative Fund	Tyndall	0.27	0.23	-2.11
AXA KiwiSaver Income Plus	AXA Asia Pacific	-1.23	-0.72	-2.71
Fidelity KiwiSaver-Capital Guaranteed Kiwi	Fidelity Life	2.04	–	–
Fidelity KiwiSaver-Conservative Kiwi Fund	Fidelity Life	1.36	2.9	3.62
ING KiwiSaver – Conservative Fund	ING	1.1	1.34	2.36
ING KiwiSaver SIL Conservative Fund	ING	1.72	1.9	3.15
National Bank KiwiSaver – Conservative	ING	1.68	1.86	2.49
Smartshares Smartkiwi Conservative Fund	NZ Exchange	2.32	2.32	0.59
TOWER KiwiPlan-Cash Enhanced	Tower	0.18	1.45	3.36
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Moderate
AMP KiwiSaver Conservative Fund	AMP	1.88	4.65	3.47
AMP KiwiSaver Moderate Fund	AMP	0.22	3.08	-0.57
ANZ KiwiSaver – Conservative Balanced Fund	ING	0.7	0.36	-2.13
ASB FirstChoice KiwiSaver Active Conservative Fund	ASB Group Invmts	-0.6	-0.46	-4.19
ASB FirstChoice KiwiSaver Tracker Moderate Fund	ASB Group Invmts	-0.27	-0.86	-4.87
ASB KiwiSaver Moderate Fund	ASB Group Invmts	0.05	-0.48	-4.21
AXA KiwiSaver Conservative	AXA Asia Pacific	-1.1	–	–
ING KiwiSaver – Conservative Balanced	ING	-0.16	-0.42	-2.9
ING KiwiSaver SIL Conservative Balanced Fund	ING	0.68	0.34	-1.57
National Bank KiwiSaver – Conservative Balanced	ING	0.66	0.31	-2.13
Smartshares Smartkiwi Balanced Fund	NZ Exchange	-2.44	-2.22	-13.68
TOWER KiwiPlan-Conservative	Tower	-1.19	-0.66	-0.41
Westpac KiwiSaver-Conservative Fund	BT NZ	0.4	0.9	-1.38
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Balanced
AMP KiwiSaver Balanced – Other Fund	AMP	-2.12	-0.59	-8.75
AMP KiwiSaver Balanced Fund	AMP	-2.01	0.83	-6.49
AMP KiwiSaver-ING Balanced Fund	ING	-0.67	0.96	-4.46
AMP KiwiSaver Moderate Balanced Fund	AMP	-1.35	1.59	-4.03
AMP KiwiSaver-TOWER Balanced Fund	Tower	-2.18	-0.99	-4.73
ANZ KiwiSaver – Balanced Fund	ING	-0.4	-1.32	-6.58
ASB FirstChoice KiwiSaver Active Balanced Fund	ASB Group Invmts	-3.33	-3.98	-11.55
ASB FirstChoice KiwiSaver Tracker Balanced Fund	ASB Group Invmts	-2.33	-3.31	-10.71
ASB KiwiSaver Balanced Fund	ASB Group Invmts	-1.9	-2.85	-10.22
Asteron KiwiSaver Balanced Fund	Tyndall	-1.52	-1.89	-8.55
AXA KiwiSaver Balanced	AXA Asia Pacific	-5.43	-6.19	-14.6
Brook Professional KiwiSaver Scheme Balanced Fund	Brook Asset Mgmt	-1.6	0.98	5.35
Fidelity KiwiSaver-Balanced Kiwi Fund	Fidelity Life	1.16	1.75	0.69
Fidelity KiwiSaver-Ethical Kiwi	Fidelity Life	-1.35	–	–
ING KiwiSaver – Balanced	ING	-1.68	-2.53	-8.14
ING KiwiSaver SIL Balanced Fund	ING	-0.41	-1.32	-6.02
National Bank KiwiSaver – Balanced	ING	-0.35	-1.29	-6.56
TOWER KiwiPlan-Balanced	Tower	-3.44	-3.51	-5.2
Westpac KiwiSaver-Balanced Fund	BT NZ	-1.81	-2.53	-9.85
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Growth
AMP KiwiSaver Growth Fund	AMP	-4.34	-1.28	-10.83
ANZ KiwiSaver – Balanced Growth Fund	ING	-1.45	-2.99	-11.16
ANZ KiwiSaver – Growth Fund	ING	-2.64	-4.88	-15.74
ASB FirstChoice KiwiSaver Active Growth Fund	ASB Group Invmts	-5.13	-6.18	-16.81
ASB FirstChoice KiwiSaver Tracker Growth Fund	ASB Group Invmts	-4.38	-5.6	-15.82
ASB KiwiSaver Growth Fund	ASB Group Invmts	-3.99	-5.1	-15.6
Asteron KiwiSaver Balanced Growth Fund	Tyndall	-4.25	-3.66	-14.92
Fidelity KiwiSaver-Growth Kiwi Fund	Fidelity Life	-0.35	-0.67	-3
ING KiwiSaver – Balanced Growth	ING	-3.11	-4.48	-13.08
ING KiwiSaver – Growth Fund	ING	-4.52	-6.37	-17.36
ING KiwiSaver SIL Balanced Growth Fund	ING	-1.5	-3.05	-10.63
ING KiwiSaver SIL Growth Fund	ING	-2.56	-4.84	-15.32
National Bank KiwiSaver – Balanced Growth	ING	-1.47	-3.04	-11.16
National Bank KiwiSaver – Growth	ING	-2.58	-4.84	-15.85
Westpac KiwiSaver-Growth Fund	BT NZ	-3	-4.13	-13.39
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Aggressive
AMP KiwiSaver Aggressive Fund	AMP	-5.72	-2.61	-13.77
AXA KiwiSaver Growth	AXA Asia Pacific	-7.94	-8.78	-20.8
Brook Professional KiwiSaver Scheme Growth Fund	Brook Asset Mgmt	-3.05	-0.89	2.33
Fidelity KiwiSaver-Aggressive Kiwi Fund	Fidelity Life	-0.78	0.31	-8.01
First NZ Capital KiwiSaver Scheme	First NZ Capital	–	–	–
Fisher Funds Growth KiwiSaver Scheme	Fisher Funds	-7.87	-4.67	-17.76
TOWER KiwiPlan-Growth	Tower	-5.78	-7.52	-15.71
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Single Sector Options
Cash
AMP KiwiSaver Cash Fund	AMP	2.17	4.46	8.62
ASB FirstChoice KiwiSaver NZ Cash Fund	ASB Group Invmts	2.03	4.26	8.54
ASB KiwiSaver Cash Fund	ASB Group Invmts	2.04	4.22	8.57
Asteron KiwiSaver Capital Fund	Tyndall	2.17	4.21	8.24
AXA KiwiSaver Cash	AXA Asia Pacific	–	–	–
ING KiwiSaver – Cash Plus Fund	ING	2.04	4.21	8.28
ING KiwiSaver SIL Cash Plus Fund	ING	1.96	3.95	8.73
NZ Guardian ANZ KiwiSaver Cash Fund	ING	–	–	–
NZ Guardian National Bank KiwiSaver Cash Fund	ING	–	–	–
TOWER KiwiPlan-Preservation	Tower	2.05	4.18	8.52
Westpac KiwiSaver-Cash Fund	BT NZ	1.41	3.54	5.57
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Fixed Income
Asteron KiwiSaver High Yield Fixed Interest Fund	Tyndall	0.79	0.6	0.19
ING KiwiSaver SIL New Zealand Fixed Interest Fund	ING	2.52	4.81	6.82
ING KiwiSaver SIL International Fixed Int Fund	ING	4.2	3.49	10.97
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Property
Asteron KiwiSaver Global Property Fund	Tyndall	0.47	-7.7	-16.38
ING KiwiSaver SIL Australasian Property Fund	ING	-4.39	-6.15	-20.73
ING KiwiSaver SIL International Property Fund	ING	-2.87	-11.05	-22.47
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Australasian Equity
AonSaver AMT KiwiSaver Milford Aggressive Fund	Milford	-0.24	3.01	7.59
Asteron KiwiSaver SRI Share Fund	Tyndall	-3.84	-10.66	-27.64
Asteron KiwiSaver Trans-Tasman Small Companies Shr	Tyndall	-9.35	-9.34	-28.18
ING KiwiSaver SIL Australasian Share Fund	ING	-1.7	-8.91	-25.06
Smartshares Smartkiwi Growth Fund	NZ Exchange	-5.21	-6.6	-26.13
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International Equity
ASB FirstChoice KiwiSaver Active High Growth Fund	ASB Group Invmts	-10.53	–	–
ASB FirstChoice KiwiSaver Global Sustainability Fd	ASB Group Invmts	-4.16	–	–
Asteron KiwiSaver International Share Fund	Tyndall	-5.93	-3.7	-18.07
ING KiwiSaver SIL International Share Fund	ING	-3.3	-3.66	-16.51
ING Kiwisaver SIL Sustainable Growth Fund	ING	–	–	–
TOWER KiwiPlan-Equity	Tower	-9.74	-11.7	-25.34
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Miscellaneous
Fidelity KiwiSaver-Options Kiwi Fund	Tyndall	5.34	13.89	23.28
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