ABN AMRO Craigs launches new superannuation initiative

Kiwistart Investment flexibility, transparent costs and leading advice are the cornerstones behind kiwiSTARTTM, ABN AMRO Craigs new superannuation initiative just launched.
Press Release

Kiwistart Investment flexibility, transparent costs and leading advice are the cornerstones behind kiwiSTARTTM, ABN AMRO Craigs new superannuation initiative just launched.

kiwiSTARTTM offers individuals a sophisticated KiwiSaver product.

Our scheme provides not only a range of defined portfolios, but also personalised solutions. Investors, with the support of an Investment Advisor, can select the securities they wish to invest in, thereby tailoring their investments to their personal circumstances, explains Stephen Jonas, Head of Client Services at ABN AMRO Craigs.

With kiwiSTART, clients who already have investment portfolios are given the opportunity to manage their investment risks over their entire portfolio rather than treating superannuation as a discreet and separate investment.

The scheme also incorporates the key tenets of ABN AMRO Craigs investment philosophy. We invite clients to monitor the composition of their investment, and help them understand investment markets, risks and rewards.

A key component of our philosophy is to minimise costs and provide a full disclosure of fees, says Jonas.

ABN AMRO Craigs core expertise is providing quality investment advice for its clients. New Zealanders need to better understand superannuation investment, explains Jonas.

They should understand exactly what they are investing in and the risks associated with that investment. They should also always seek sound professional advice.

Jonas says that making the wrong choice with a KiwiSaver scheme provider can be costly with those who change schemes potentially incurring additional entry and exit fees. He also warns that headline rates or fees may appear low but the full costs and expenses may not be apparent and expert advice is required.

ABN AMRO Craigs has over 100 Investment Advisors throughout its 16-branch network, helping clients make more informed investment decisions.

The company has not participated within the superannuation space previously, but with years of investment management experience, KiwiSaver provides an opportunity to broaden the range of services it offers for both existing and potential clients.

As we have designed kiwiSTART to be flexible, we are able to encapsulate elements of socially responsible investing, by incorporating a range of SRI options as part of our personalised investment choices, says Jonas.

Although its product differs by enabling greater individually managed accounts, people who sign up to kiwiSTART will still qualify for all the Government incentives to which they are entitled.

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The government is proposing further changes to super schemes in line with its aim of encouraging greater savings, Finance Minister Michael Cullen, Commerce Minister Lianne Dalziel, State Services Minister Annette King and Revenue Minister Peter Dunne announced today.

“The amendments we propose will give those in super schemes that comply with KiwiSaver rules more protection and allow savers better access to their funds in retirement,” the Ministers said.

“It is important that existing schemes which wish to become KiwiSaver-complying face the same rules as KiwiSaver schemes.”

The Ministers said the changes were a small but significant fine-tuning of proposed KiwiSaver legislation.

“The ideal time to make these adjustments is now, while a Bill dealing with KiwiSaver legislation is before Parliament.”

The changes include:
Requiring complying funds as well as KiwiSaver funds to lodge employer participation agreements with the Government Actuary. Employer participation agreements set out conditions under which employees are scheme members. This measure will give greater protection to employees, by ensuring there is government oversight of employers’ involvement in these funds.
Allowing benefits in complying superannuation funds to be withdrawn as a lump sum. This will give members of complying schemes the choice of taking a lump sum or buying an annuity when they are eligible to access their savings, a provision which already applies to KiwiSaver schemes. As legislation stands, members of complying superannuation funds may be forced to buy annuities at extra cost.
Avoiding “double-dipping”. Members of some existing superannuation schemes in the State sector already receive a contribution from the Crown as their employer. This will continue unchanged. However the legislation will be amended to provide extra assurance that if these people also join KiwiSaver they will not be able to receive additional employer contributions.

As well, as previously announced, the legislation will be amended to make sure that people receive the member tax credit of up to $20 a week from the time they join KiwiSaver. As the legislation is currently worded, some KiwiSaver members would not become eligible for the tax credit until several weeks after they began making contributions.

Under the proposed law change, the member tax credit will apply from the first of the month in which the contribution is made, so that, for example, all contributions that begin in July will be matched by a tax credit from 1 July.

“We are confident these changes will further strengthen KiwiSaver, and make it a more attractive proposition for New Zealanders wishing to secure a more comfortable retirement,” said the Ministers.

The changes will be added to the Taxation (Annual Rates, Business Taxation, KiwiSaver and Remedial Matters) Bill, which is currently before Parliament.

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First KiwiSaver provider performance rankings

The managed funds analyst Trident Research has released rankings for the six default KiwiSaver balanced fund providers, based on the level of their management fees.
Press Release

Through its SmartKiwiSaver website ($30 annual subscription), Trident Research operates the only independent consumer-type education, signup, calculator and fund monitoring website for KiwiSaver, all accessible from one site.

In the balanced funds category, ASB charges the lowest annual management fees of $73, while sixth-placed Mercer Active Balanced is more than double, at $151.80.

“In percentage terms the differences in management fees might seem small, but as our website calculators show, they have a very significant effect on how much you will get at retirement time,” said the director of Trident Research Phil Harris.

Trident Research had developed the SmartKiwiSaver website to give employer and employee KiwiSavers affordable access to the same kind of funds performance analysis that was available to major fund managers and to the financial planning industry, said Harris.

“Employers in particular are getting really confused and the beauty of this kind of website is that you can suggest employees go there and know that they’ll get themselves sorted with a sign-up very quickly. They can also email questions to SmartKiwiSaver.

“Because there’s so little money in it, no one else seemed interested in providing this independent education and performance analysis website.

“But we think it’s important to educate intending KiwiSavers about the basics of risk and return and the importance of choosing a fund that has the lowest management fees and performs consistently in the upper quartile of returns for its category”, said Harris.

As a long-time independent observer of the funds management industry, Harris said he had been amused to see some KiwiSaver fund managers claiming to have the lowest management fees.

“For instance, I’m afraid Gareth Morgan and his fund members are in for a bit of shock when they find where his fund is placed in the management fees ranking of the 30 balanced funds so far registered with KiwiSaver,” said Harris.

Fees comparisons for a KiwiSaver account balance of $10,000 with just the six default providers – Balanced Funds category.

Scheme Fees paid annually % of balance Rank
ASB Balanced. $73 0.73 1
ING Balanced $121.50 1.22 2
TOWER Balanced $131 1.31 3
AMP Balanced $138.50 1.39 4
AXA Balanced $143.92 1.44 5
Mercer Active Balanced $151.80 1.52 6

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Small business duped over KiwiSaver

The Labour Government is misleading small businesses over the benefits of KiwiSaver, says Nationals Associate Small Business spokesman, Chris Tremain.
Press Release – National Party

Small Business Minister Lianne Dalziel told the Small Business Expo this week that KiwiSaver would have a huge impact on New Zealand capital markets and they would benefit by easier access to finance.

The Minister has not done her homework if she actually believes this to be true.

The reality is that KiwiSaver schemes will largely invest in low-risk portfolios – mainly overseas in blue chip public entities or funds.

She knows very well that the Cullen Fund, for example, has a long-term goal of investing just 7.5% in New Zealand equities and only in blue chip stocks and funds. Very little, if any, of the funds are invested in high-risk private equity or small business.

Does she think KiwiSaver fund managers will be any less prudent?

What she also conveniently forgot to mention was that most small and medium businesses in New Zealand are sole traders, trusts or partnerships that did not receive the benefit of the Budget-announced corporate tax reduction and will therefore have to bear the full cost, after tax credits, of the KiwiSaver employer contribution.

For the Minister to claim that KiwiSaver will benefit small businesses is misleading at best and, at worst, a cruel joke.

The truth is KiwiSaver will not only fail to deliver easier access to finance for small businesses, but it will actually push up the cost of doing business for the majority.

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