KiwiSaver bolt-ons not holding, GA report shows

The Government Actuary’s (GA) first annual KiwiSaver report has revealed a skewed distribution of flows to providers with 21 of the 46 schemes with registered members reporting assets of less than $2.5 million as at March 31 this year, with 13 of these securing less than $500,000.

Friday, September 12th 2008, 6:21AM

by David Chaplin

According to the GA report, which was tabled in Parliament yesterday, a further 16 KiwiSaver schemes recorded funds under management between $2.5 million and $25 million.

Only nine KiwiSaver schemes had garnered assets of over $25 million in the nine months to the end of March. Between them, the nine largest providers managed $553 million of the total $701 million in KiwiSaver schemes as at March 31, representing almost 80% of the 486,277 members enrolled.

The figures were particularly discouraging for the seven employer ‘bolt-on’ KiwiSaver schemes, which between them could muster only 569 members and $1.1 million.

A spokesperson for the GA said the trustees of employer schemes would be looking seriously at the viability of their KiwiSaver bolt-on schemes if membership doesn’t pick up soon.

Industry-based KiwiSaver providers also struggled in the first year of operation with the 11 schemes in this category collectively attracting only $21.5 million and just over 12,500 members.

The retail KiwiSaver schemes proved the most popular option with the 28 providers (including the six default operators) drawing in almost $680 million and more than 473,000 members in the nine months to March 31, 2008.

The GA report also showed the value of all KiwiSaver investment assets dropped by almost $7.3 million over the first period of operation. As well, KiwiSaver providers claimed over $6 million in fees in the nine months to March 31 including: $3.94 million in administration fees; $625,591 of investment fees; trustee fees of $95,483, and; about $1.5 million in “other scheme expenses”.

While almost 495,000 members had signed up to KiwiSaver as at March 31, the GA reported almost 65,000 ceased contributing to their schemes over the period. Of these, just over 1,200 members had elected to take a ‘contribution holiday’.

The remaining 63,000 plus individuals “stopping contributions for other reasons” were most likely children not eligible for matching government tax credits, the GA spokesperson said.

Since March 31 KiwiSaver numbers have swelled to more than 750,000 and over $1 billion in assets under management. The GA report says as at the end of June this year it had registered a total 54 KiwiSaver schemes.

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