The Government announced in its Budget this year that it would no longer offer the kickstart, effective immediately.
It gave providers less than two months to update their marketing material and other documentation to reflect the changes.
Brian Henry, managing director of Amanah Ethical, which operates a KiwiSaver fund that operates according to Islamic principles, said it was a sad day for KiwiSaver.
He said all providers had been affected. “We’re all in the same boat, everyone has had to change their documentation. It’s a huge change. I know from talking to the other providers that having that $1000, if you’re 16, 17, 18 deciding two opt in or keep the 3% in your pay packet, the $1000 is the thing that makes up their minds…. the whole purpose of the scheme is a little bit undermined.”
Therese Singleton, general manager of investments and insurance and AMP, said the change was costly. "With no notice and no consultation with the industry, there's a cost to that, there's a cost to the consumer and to the institution. Open dialogue with industry through regulators and the ministry is very, very important."
But Henry said his scheme had been especially disadvantaged.
The Islamic scheme had not been on offer long. Many people had been waiting for a fund that was in keeping with their Islamic beliefs and had only had a short time to investigate the Amanah offer.
“We had eight weeks properly in the market and then bang it’s gone.”
He said the $1000 was not just an incentive to encourage people to join in the first wave but to continue to join and to sign up their children. “Once the kids are in, they’re in the market forever.”
Steady numbers had been joining but it took time to get used to the product and his scheme had not been in the market long enough for many people who sought an Islamic product to make the most of it, he said.
He has written an open letter to Prime Minister John Key asking him to reconsider the removal of the kickstart.
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