Consultation opens on review of KiwiSaver default funds
Published: 07 August 2019
The Ministry of Business, Innovation and Employment (MBIE) and the Treasury are consulting on options to ensure New Zealanders enrolled in KiwiSaver default funds make the most of their investment.
Many people are automatically enrolled in default KiwiSaver funds when they start a new job, and a significant number of them – around 715,000 – remain in those funds.
MBIE and the Treasury are now seeking feedback on proposed options for improving the settings for default fund members.
Sharon Corbett, Manager Financial Markets at MBIE, says one proposal is to change the settings from conservative risk to higher-growth investments.
“The conservative risk setting was intended as an interim arrangement for members while they considered moving to another fund. However, after over 10 years of the KiwiSaver scheme large numbers of people are staying in default funds, despite the potential gains from moving to a higher-growth fund.”
Ms Corbett says another proposal is to reduce default provider fees.
“Over time, fees can make a big difference in the amount of money people will have to retire with. We’re seeking feedback on the value members get from the fees they pay.”
The consultation also asks for feedback on proposals to ensure KiwiSaver default providers are investing responsibly and ethically.
“We want to know whether there’s a role for KiwiSaver providers to help grow the economy by developing New Zealand’s capital markets. We also want to know whether people believe default providers should be required to invest ethically – or be more transparent about where they’re investing.”
The terms of the nine default providers will expire in 2021, and Ms Corbett says the review will help ensure the right settings are in place before new providers are appointed.
“We want to know what more can be done to ensure KiwiSaver default funds are working as well as they can. I encourage everyone with an interest to read the discussion paper and put forward their view.”
The discussion paper is available now. Consultation is open until 18 September 2019.
Note to editors
Of the approximately 715,000 people in a default fund, 430,000 have not actively chosen to remain there, while 285,000 have actively chosen to remain there.
MBIE media contacts
Phone: 027 442 2141
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