Regan on AMP's KiwiSaver merger plans
AMP managing director Jack Regan discusses KiwiSaver and the many changes that the company is making now it has decided its scheme with the AXA one.
Thursday, February 21st 2013, 6:00PM 4 Comments
AMP has decided to give up one of its two KiwiSaver default schemes by combining the AMP and AXA funds.
Under the proposal, announced today, it has asked Inland Revenue to suspend the default allocation to the AXA scheme. This process takes 90 days as that is the maximum time allowed for default members to be allocated to a scheme.
AMP managing director Jack Regan says that an “enhanced” KiwiSaver product will be developed which essentially uses the AXA investment management process and the AMP administration scheme.
He says that AXA’s multi-manager approach to managing money is a “stronger proposition” than the AMP approach.
Meanwhile AMP has invested “very substantial sums” into developing its administration technology. Over time this will include its “My Portfolio” front end which will allow customers to see all their AMP products including life insurance.
Details of the “enhanced” offering are yet to be unveiled Regan says AMP will be looking to reduce fees over time.
While AMP will lose one of its default funds, and the automatic inflows that come with it, Regan doesn’t expect to see a big drop in new funds flow. He says AXA members have known for two years that its scheme was part of AMP and if they wanted to leave they would have done so by now.
He noted that KiwiSaver default mandates are coming up for review and AMP “didn’t anticipate to retain two schemes.”
He says there is very strong growth in KiwiSaver assets under management and highlights that Treasury is forecasting AUM to grow to $60 billion by 2012.
However, in its results announcement the company said that KiwiSaver inflows had fallen A$102 million to A$257 million during the year.
The fall was due to the government reducing its matched KiwiSaver contributions, competition from the banks and higher first home withdrawals.
Regan said the first home withdrawals accounted for a “relatively minor” portion of this fall and the other two factors were “evenly balanced.”
While there has been plenty and comment and concern about bank selling practices around KiwiSaver Regan believed the playing field was being levelled “somewhat” with the FMA’s guidelines on sales practices due to come into force soon.
The merging of the two schemes has to be approved by the Financial Markets Authority and is being done under section 119 of the KiwiSaver Act.
It is expected customers will receive a comprehensive transfer pack in May including full details of the proposed transfer process, which is expected to be complete by late July or August subject to necessary approvals.
AMP has more than 260,000 KiwiSaver Scheme customers across its two KiwiSaver Schemes and 18% of KiwiSaver funds under management.
“With our core focus on investment, our extensive network of professional qualified advisers, and the scale to invest in product and service development to meet the needs of customers, AMP is well positioned for ongoing leadership in KiwiSaver,” Regan says.
“We are focused on helping to educate our KiwiSaver customers, especially those in default options, to choose the investment options that best match their individual circumstances and risk appetite, and AMP is very active in that regard.”
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