KiwiSaver regulations fast tracked

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Concerns over KiwiSaver fund management have led to the government fast tracking work to ensure the integrity of KiwiSaver is maintained for the 1.3 million people and $4.88 billion of their money invested in the scheme.

Tuesday, March 9th 2010, 12:35PM

Minister of Commerce Simon Power says in recent weeks there has been growing concern regarding the regulation of KiwiSaver schemes.

Huljich Wealth Management brought the spotlight on KiwiSaver account management after it failed to disclose that its then-managing director Peter Huljich had injected cash into the funds because it had not performed well.

Huljich said he felt morally responsible for the investment decisions, but others said it was to give a false impression about the funds' performance. The Securities Commission is investigating.

Australian investment research company Morningstar Australasia has also warned KiwiSaver investors to look closely at their providers, as there was a very poor disclosure regime in New Zealand.

Power says mum and dad investors must have confidence that their money is being well managed.

"The Government indicated last month it supports recommendations from the Capital Market Development Taskforce for additional regulation of managed funds, including KiwiSaver.

"We were intending to make changes in this area as part of the current review of the Securities Act. However, in light of recent developments, I have asked my officials to fast-track this work to ensure investor confidence is maintained."

Power has asked officials to report to him within three to four weeks on whether:

• The monitoring and reporting regime for default funds should be extended to all KiwiSaver funds. This would require detailed quarterly reporting to an expert monitoring panel and require that one of the trustees of KiwiSaver schemes be a trustee corporation, rather than just an independent trustee, as at present.
• KiwiSaver funds should be required to regularly report to investors and the regulator on the returns, fees and assets of each fund in a consistent and comparable manner. At present, the only requirement for non-default schemes is for annual returns, and I am advised these are not prepared in a manner which allows for easy comparison between schemes.
• To increase the ability of the regulator to supervise the trustees of KiwiSaver schemes and hold them accountable for fulfilling their obligations.
• Further powers for enforcement by regulators are necessary.

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