Appointment of KiwiSaver default providers

On Friday 14 May 2021, the Minister of Finance and the Minister of Commerce and Consumer Affairs announced the six KiwiSaver providers who will offer default fund services from 1 December 2021.

Changes in the default providers

The new providers are:

  • BNZ
  • Booster
  • BT Funds (Westpac)
  • Kiwi Wealth
  • Simplicity
  • Smartshares (NZX).

These providers were appointed following a competitive tender process. The applicants were assessed against a set of criteria which included fees, their ability to deliver the investment product, manage transitional arrangements, provide a good customer experience for their members, and the provider’s organisational structure and standing.

Changes to the fund settings

The new default funds that commence on 1 December 2021 will have different settings from current funds, including the following:

  • the investment fund type has moved from conservative to balanced
  • KiwiSaver fees will reduce, and be simpler and more transparent
  • default providers will be required to engage with their members to help them make informed decisions about their retirement savings at key points
  • investment in fossil fuels and illegal weapons will be excluded from default funds
  • default providers will be required to maintain a responsible investment policy on their websites.

What will the changes mean for default fund members?

All default KiwiSaver members (members in a default fund who have not yet made an active choice to remain there) will be transferred to one of the appointed default provider’s KiwiSaver funds.

The transfer of default members is happening to ensure default members continue to receive the protections and benefits of being in a default fund (such as low fees and minimum service standards). These KiwiSaver members will not need to take any action for this to happen.

Review of FMA conflict of interest management

In 2021, concerns were raised regarding the Financial Markets Authority’s (FMA) management of a potential conflict of interest in relation to their advice to the Government on the appointment process for KiwiSaver default providers from 1 December 2021.

The Minister of Commerce and Consumer Affairs ordered an independent review into the FMA’s management of the potential conflict to ensure the default provider appointment process was beyond reproach. The review was undertaken by Kristy McDonald QC ONZM.

The review found the FMA’s management of the conflict did not have any impact on its advice to Ministers in relation to the appointment of KiwiSaver default providers.

MBIE is confident that the review and appointment process was robust and followed best practice.

A redacted copy of the review report is available below.

Further information

Last updated: 18 March 2022