KiwiSaver

Kiwi Wealth has followed BNZ and put administration of its default KiwiSaver Scheme on the MMC platform.

MMC says this is an extension of its services to Kiwi Wealth. It will provide full registry services, as well as unit pricing and fund accounting for Kiwi Wealth’s Managed Funds and KiwiSaver products.

By transitioning these services from an-inhouse operating model to MMC, Kiwi Wealth will achieve a scalable infrastructure to accommodate growth and deliver enhanced investment outcomes to its members and investors, while also taking advantage of economies of scale.

The soon-to-be implemented operating model will support Kiwi Wealth’s requirements as a default KiwiSaver provider, and includes full PIE and other tax calculations, reconciliation and reporting. MMC’s API interface with IRD will improve automation, speed up KiwiSaver transfers and improve the overall member experience.  Kiwi Wealth will also be utilising MMC’s APIs to deliver its industry leading digital investor experience layer. 

“By aligning Kiwi Wealth’s KiwiSaver and Managed Funds operations, we are benefitting from operating synergies, agility and reduced operational risk," Kiwi Wealth chief technology officer Craig Wardsays in a statement. "Through outsourcing our investment administration to a trusted partner, our investment and operational teams will be freed up to focus on what we do best; creating better financial futures for Kiwi by helping people get informed about how they can grow their wealth.”

Kiwi Wealth’s relationship with MMC dates back to 2018, when it first started using MMC’s investment administration services for managed funds.  Once the KiwiSaver transition is completed, Kiwi Wealth expects its remaining products, such as its Private Portfolio Service, will follow. 

MMC’s acquisition of Aegis in December 2019 means it can offer a holistic investment administration solution that spans both fund and wealth administration services. 

In the meantime, by being part of MMC’s investment management community, Kiwi Wealth benefit from streamlined and robust operational services leveraging latest cloud technology. This includes regulatory compliance, complex reporting requirements and AML (Anti Money Laundering) checks. 

BNZ have gone live with MMC’s registry services to support its default KiwiSaver scheme.

MMC chief executive Vedran Babic says the project took six months to deliver and BNZ is the first KiwiSaver default provider for MMC’s registry services.

The bank were already using MMC’s fund administration services for unit pricing and fund accounting across all their products, with wholesale registry and some specialised retail registry for the Term PIE.

“We see a general trend from existing clients wanting to extend their MMC footprint to take full advantage of our trusted services, expertise and achieve economies of scale while also reducing operational risk”, Babic says.

By offering multiple services across the BNZ KiwiSaver Scheme, MMC can seamlessly integrate both registry and unit pricing using its proprietary technology and provide a holistic view of their KiwiSaver products. The additional services to BNZ also include flexible reporting capabilities and options to leverage MMC’s new digital and insights services.

 

MMC head of its Transformation Management Office, Chris Watson says: “Data migration typically represents a challenge in any large transition project. As we have done a number of these transitions in the past, we rely on well-defined specifications for our data requirements and can leverage bespoke tools that we have built for translating and validating the data for a smooth transition.”

The project also delivered a dashboard solution to visually display data that can be used directly by management. This will save a considerable amount of time as the previous needs for manipulating data were removed.

In parallel to this project, MMC are progressing their efforts to deliver APIs that will provide direct links to the Inland Revenue as well as to support new KiwiSaver default provider arrangements by the end of November.

KiwiSaver funds continue to ride the wave of buoyant stock markets with all funds making positive returns to the quarter ending June 30.

According to the latest Morningstar quarterly KiwiSaver Survey released this week, all multisector KiwiSaver funds made positive returns with average category returns ranging from 1.6% for the conservative category and up to 5.8% for the aggressive category.

Morningstar's Asia-Pacific director of manager research Tim Murphy says total KiwiSaver assets continue to grow and are close to reaching $83 billion.

Murphy says Morningstar agrees with the Financial Markets Authority's recent guidance to KiwiSaver providers on the inappropriateness of marketing shorter-term periods, like 12-month returns, as a means of attracting new prospective investors.

"And as we have repeatedly reiterated every time we publish our quarterly KiwiSaver Survey, 'it is most appropriate to evaluate performance of a KiwiSaver scheme by studying its long-term returns'."

Murphy says worldwide equity markets generally made positive returns over the June quarter, as economies continue to open and recover, vaccine rollouts expand and more people return to the workplace, against this backdrop the MSCI World Index was up 8.0% in NZD.

The US market ended the quarter up 8.6% and almost all sectors made positive gains, led by real estate and technology sectors.

"KiwiSaver funds generally reflected the underlying market conditions experienced over the June quarter with all multisector funds posting positive returns," says Murphy.

"Funds with larger exposures to international growth assets generally outperformed over the three-month period.

"Top performers over the quarter against their peer group includes ANZ Default Conservative 2.3% (Multisector Conservative), OneAnswer Conservative Balanced 3.0% (Multisector Moderate), ASB Positive Impact 4.9% (Multisector Balanced), AMP ANZ Growth 5.9% (Multisector Growth), and Milford Aggressive 7.8% (Multisector Aggressive)."

Over 10 years, the growth category average has given investors an annualised return of 10.5%, followed by Aggressive (10.3%), Balanced (8.7%), Moderate (6.6%), and Conservative (5.9%)

KiwiSaver assets on the Morningstar database sit at more than $82.9 billion as of June 30, up from $76.3 billion on December 31, 2020.

ANZ leads the market share with more than $18.5 billion. ASB is in second position, with a market share of 17.1%.

Westpac holds third spot ahead of Fisher Funds, while AMP sits in fifth.

The six largest KiwiSaver providers account for approximately 74% of assets on the Morningstar database.

More than 60% of New Zealanders are worried they will not have enough money to support themselves in their retirement, a new study shows.

According to research undertaken by the Financial Services Council (FSC) – KiwiSaver at a Crossroads – almost three-quarters of those surveyed would also like KiwiSaver to be compulsory and support an increase in contribution rates.

However, with the average KiwiSaver balance sitting at just over $25,000 many Kiwis will find it difficult to retire comfortably.

As KiwiSaver celebrates its 14th birthday this month, the FSC has released new research looking at what New Zealanders think about the scheme that has around $82 billion invested, the role it plays in their retirement preparedness, and where it needs to head in the future.

“This research shows that New Zealanders overwhelmingly support KiwiSaver and want its role to be increased”, says FSC chief executive Richard Klipin.

“With 78% supporting compulsion and almost three quarters (73%) supporting an increase in contribution rates, there is widespread public support for action in both areas.

“As an additional indicator of support almost 80% of respondents thought they were getting value for money for the KiwiSaver fees they pay."

Klipin says the research also found New Zealanders are deeply worried about not having enough savings for their retirement.

“64% of New Zealanders, which represents 2.5 million people, are worried they won’t have enough to retire comfortably or afford where they want to live.

“With the average KiwiSaver balance just over $25,000, there’s a yawning gap between what New Zealanders have in their KiwiSaver and what they need to save," he says.

“That means most Kiwis will fall short of being able to fund a modest retirement, let alone a comfortable one."

Klipin says when you consider property ownership is on the decline and many younger Kiwis probably won't own their own homes by retirement, $25,000 is not going to be enough.

“With 17% of New Zealanders not contributing to KiwiSaver at all and more than 30% contributing only the minimum 3% there’s no doubt that we need to do more to help New Zealanders build their KiwiSaver balances,” says Klipin.

Financial literacy was also an issue with a quarter of survey respondents saying they didn't know how much they needed in retirement, and 22% didn't know the balance of their KiwiSaver.

Klipin says that while overall, the findings show New Zealanders strongly support changes to KiwiSaver, a wider discussion is needed and there is a trade-off between the pace of change and affordability.

“Implementing changes as part of a phased approach would help ensure that vulnerable customers are not thrown in the deep end right away and have time to prepare for any significant changes to the KiwiSaver scheme.

“KiwiSaver has made good progress over its first 14 years, and we hope this research illuminates some of the issues and the possibilities for a way forward.

“Getting these issues right is not easy and we don’t claim to have the answers."

The research was conducted online between April 15 and 26 by CoreData and collected a total of 2,035 valid responses. It is representative of the New Zealand consumer population in terms of age, gender and income based on the latest Stats NZ data.