KiwiSaver

KiwiSaver default providers will be forced to offer investment education and impartial financial advice, the Government has announced today.

It has completed a review of the default scheme, which started last year, and issued a Cabinet paper in response.

“This [education and advice] requirement should reduce the percentage of fund members who are inappropriately in a conservative fund,” the paper said.

It said the new disclosure requirements would also make it easier for KiwiSaver members to make an active choice.

But members in default schemes won’t be put into “life stages” funds, as had been suggested, and the mandate will be kept for default KiwiSaver providers to manage funds conservatively, with 15% to 25% in growth assets.

It had been argued that young savers in particular would benefit from being placed automatically in funds that would change their risk allocations depending on the saver’s age.

“The government believes it should take a risk-averse approach, as the default provider arrangement is making initial investment decisions on behalf of others,” English said in a statement. “The aim of default funds is to provide stable returns and build confidence in KiwiSaver while members actively consider the best fund for their individual circumstances.”

About a quarter of KiwiSaver members are in default funds with about $3.5 billion under management.

The Government will retender for default schemes with a view to appointing them in April next year. If a current default provider is not reappointed, default members will be asked if they want to stay with the provider. If not, they will be reallocated to a new default provider.

BNZ KiwiSaver Scheme has reached $100 million funds under management, just over six months following its launch in February this year.

Head of wealth and Private Bank, Donna Nicolof attributes the BNZ KiwiSaver Scheme’s faster than expected growth to the accessibility and convenience of BNZ’s nationwide store network.

“While some customers enjoy the ability to setup their funds online, 70% of our customers have signed up to KiwiSaver by coming into a BNZ store.

“This shows that New Zealanders generally prefer a face-to-face approach when it comes to discussing their retirement savings.”

BNZ KiwiSaver Scheme customers can add $20 to their retirement savings for every 108 Fly Buys points redeemed.

The Fly Buys conversion initiative has also proved popular with customers. In less than two months customers have added an additional $20,000 to their or someone else’s KiwiSaver account.

Superlife says it is business as usual for the organisation, despite losing its distribution agreement with TSB.

TSB took a 26.39% stake in Fisher Funds almost six months ago.

Fisher is New Zealand’s biggest locally-owned KiwiSaver operator. Superlife has now been dropped from TSB’s website and details of the Fisher KiwiSaver are tipped to appear soon.

Michael Chamberlain of Superlife said TSB was just a small part of its distribution system. He would not say what percentage it represented.

“TSB was one of the many distribution channels we have. Superlife is the only growing master trust in the market.” He said its main distribution network was through employers.

“I would also argue that people that use us do so because of the service they get and the level of information we provide.”

TSB is in the process of educating staff about Fisher products.

Murphy told media for the time-being TSB staff would recommend the Fisher products under ‘class advice’ rules, which don’t require employees to hold AFA status. But TSB would eventually have its own AFAs. Superlife manages about $260 million in its KiwiSaver scheme, an increase of just over $56 million in the 12 months to the end of March this year.

AMP has been given the sign-off to combine its two KiwiSaver schemes.

The FMA has approved the transfer of the AMP Wealth KiwiSaver Scheme members to its AMP KiwiSaver Scheme, which AMP says now has the strengths of both schemes.

It will mean more than 260,000 members in the AMP KiwiSaver Scheme, with lower fees and access to AMP’s Lifesteps Investment Programme, which moves people through different investment funds depending on their age and investment profile.

Managing director Jack Regan said: “We’ve very pleased to move to a single AMP KiwiSaver Scheme that offers members the high-quality investment choices and services you’d expect from a company with the scale and experience of AMP.”

It follows a review of AMP’s strategic asset allocation of diversified funds in May.

The AMP Wealth KiwiSaver Scheme was the top-performing default fund in the year to June 30, according to Morningstar.

Regan said enhancements to AMP’s KiwiSaver scheme, including a multi-manager investment approach, were a tangible benefit of having brought AMP and AXA together.