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Asteron shuts retail super scheme as KiwiSaver kicks in

Asteron will close its flagship $300 million superannuation fund to new members on March 15, citing the rise of KiwiSaver as a major contributor to the decision.

Tuesday, February 17th 2009, 5:10AM

by David Chaplin

According to Antony Vriens, Asteron managing director, the group's Superplan product was losing relevance as New Zealanders turn increasingly to KiwiSaver as their retirement savings vehicle of choice.

Vriens told Good Returns money has flowed steadily out of the traditional retail superannuation market following the launch of KiwiSaver in 2007 forcing providers to decide on the fate of their “legacy products”.

“The decision [to close Asteron Superplan to new members] was a consequence of KiwiSaver,” he said. “The cost of supporting new business was becoming too expensive.”

Vriens said future retail retirement savings would be directed into Asteron's KiwiSaver scheme, which had garnered only $3.4 million from July 2007 to March 31, 2008.

As at March 31 last year Asteron Superplan managed about $330 million on behalf of 12,500 members, making it one of the country's largest retail super schemes. It is understood the scheme has shrunk since that date, however, Vriens said it still managed over $200 million.

In a note to advisers sent out yesterday, Asteron said it would “ continue to fully support our existing client base and ensure that they receive the best possible returns on their investment”.

Existing Superplan members will also be able to keep making contributions. Vriens confirmed the remaining funds would be “actively managed” for as long as appropriate. He said, given the member profile, the scheme could continue to operate for another “50 or 60 years”.

Asteron also revealed it would reduce the maximum adviser commission for new regular contributions to the Superplan scheme “into line with the market”. Under the terms of the Superplan agreement, advisers could receive up to 90% of members' first year regular contributions as part of an “establishment fee”.

“To their credit, most advisers dialed down the fee,” Vriens said.

Asteron is not the only retail superannuation fund to experience a dramatic fall-off in assets and membership post KiwiSaver with one of the largest schemes ASB Easyplan, for example, losing almost $120 million in net withdrawals while funds under management slumped from $600 million to $450 million in the 12 months to March 31, 2008.

Over the same period ASB's KiwiSaver product grew from zero to top $100 million making it the largest single scheme in the market.

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