Naming default providers delayed

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News on which funds management firms are in line to win KiwiSaver default provider status has been put back till next month.

Thursday, November 23rd 2006, 5:25AM

Good Returns understands a decision on which firms were going to be default providers was due to be made this week (although in MED’s “indicative timeline” the “terms of appointment” were scheduled for October). However, a number of firms spoken to say they have had letters from the Ministry of Economic Development advising them that the decision has been put back until December.

No reasons for the delay have been given.

An MED spokesman, when asked by Good Returns, denied there had been a delay.

The ministry has been playing the default provider selection process very close to its chest and has been giving out little information about who has made the short-list.

The talk is that more than a dozen firms or groups put up their hand for default provider status. These include firms already offer state sector retirement schemes (AMP, ASB and AXA) along with others including Tower, Westpac/BT, ANZ/ING, Mercers and Promina (which owns Asteron and Tyndall).

There is also speculation that one of the current state sector providers did not make the default provider short-list and has lobbied politicians and officials to get back on it.

It is understood the process is that a recommending committee will put the names of firms selected for default provider status to MED, who will then take them to ministers for approval.

Under the tender documents put out by MED the default provider offering is little more than a glorified cash management account, being low risk and offering returns in line with a term deposit.

However fund management firms are keen to win default provider status as it is likely to be the biggest source of funds flow into KiwiSaver.

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