First KiwiSaver fund to close

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Eosaver, the KiwiSaver scheme owned by Australian firm Eo Financial Services, has decided the market is too crowded and, rather than look for an alternative, has become the first provider to walk out the door.

Thursday, June 4th 2009, 11:06PM

Eosaver, which has around 3,000 KiwiSaver clients with assets totalling $5.5 million, withdrew from the market at the end of last month. Existing clients will be allocated to a default provider if they fail to choose a new fund.

The "exit from the market is primarily due to a saturation of the KiwiSaver provider market," the company said in a statement.

Good Returns understands Eo looked for a buyer in March after its published accounts showed the KiwiSaver provider lost just over $2 million in the 13 months ended June 30 last year, with a recorded revenue of around $28,000 from administration fees.

The company entered the market in 2007 and was confident it would be able to provide superannuation services to its recruitment clients on both sides of the Tasman.

Since the National-led government halved the required minimum contribution for the scheme earlier this year, the market has been expected to consolidate.

The first merger of state-sponsored retirement funds took place last week when Gareth Morgan KiwiSaver took over the IRIS KiwiSaver run by the Engineering, Printing, and Manufacturing Union, National Distribution Union, and Service and Foodworkers' Union.

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