First KiwiSaver scheme to go

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Eosaver, the KiwiSaver scheme owned by Australian firm Eo Financial Services, appears likely to be the first provider to exit the market.

Tuesday, March 17th 2009, 5:30AM

by David Chaplin

Several sources contacted by Good Returns have confirmed Eosaver was being shopped around by its Australian owner, which has been losing money on the scheme since launching in May 2007.

According to the latest published accounts for Eo Financial Services (NZ), the KiwiSaver provider lost just over $2 million in the 13 months to the end of June last year with recorded revenue of about $28,000.

Sasha Grujic, Eo Financial Services national manager NZ, said the “New Zealand office has no knowledge of any sale”.

“However, that's not our decision to make,” Grujic said.

Megan Bolton, head of the Melbourne-based Eo Financial Services group, declined to comment on the prospects for its New Zealand operations.

The Australian firm provides services to a number of superannuation schemes including Recruitment Super, Accountants Super and Australian Enterprise Super.

At the time of Eosaver's launch in 2007, Kevin Beasley, who headed the Eo group until last year, told Good Returns the KiwiSaver scheme would enable the group to provide superannuation services to its recruitment company clients on both sides of the Tasman.

“But we could really shake the superannuation market up [in New Zealand] too,” Beasley said at the time.

However, Eosaver has struggled to build much scale in New Zealand with funds under management as at October 2008 totaling $3.8 million, representing about 3,300 clients. The scheme splits its investments between Tower and AMP.

Following the National Party's changes to the KiwiSaver scheme last year, which effectively halved the contribution rate from a targeted 8% to 4%, the market has been expected to consolidate.

Sam Stubbs, head of Tower Investments, said consolidation in the KiwiSaver market was “inevitable”.

Stubbs confirmed Tower was in talks with a couple of smaller KiwiSaver providers.

“We're interested in acquiring [KiwiSaver schemes],” he said. However, Stubbs said it was difficult to put a price on KiwiSaver schemes as most were still “loss-making” entities.

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