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KiwiSaver fees must be disclosed in dollars - in the future

Commerce and Consumer Affairs Minister Paul Goldsmith says all KiwiSaver annual statements will have to disclose total fees paid in dollar terms from 2018, however one provider says it should start happening much sooner.

Wednesday, December 14th 2016, 6:23AM

Paul Goldsmith

Goldsmith says, in his Cabinet paper on the changes, that the current regulatory requirements are minimal and do not provide investors with enough
information to make informed decisions about their retirement savings.

He says the changes are designed to remedy an existing problem whereby, in the absence of regulatory requirements, a number of KiwiSaver providers are only disclosing a fraction of the fees investors are paying.

"This is unacceptable from a transparency perspective and also may suppress competition amongst KiwiSaver providers in the long term if they are not
competing on price."

“Fund fees can have a considerable impact on an investor’s total retirement savings. Kiwis should have easy access to an accurate statement of the fees they are paying.

“Some providers have indicated they need to make IT system changes and will not be able to provide a dollar figure for fees by next year. The regulations will include a one-year transitional option for these providers.

“Providers not able to include a dollar figure for fees in 2017 annual statements will be required to disclose total fees as a percentage. All providers will be required to report dollar fees from 2018.

“I am still of the view KiwiSaver providers should be working toward providing their members with this information sooner than the regulatory deadline.”

The annual statement is a good opportunity for investors to take stock of the progress of their investment. Goldsmith says research show there is a high readership of annual statements, and that makes them a good place to disclose this information.  

It will help people understand their investments and prompts them to make decisions that will improve their retirement outcome, he says.

Simplicity chief executive Sam Stubbs has hit out at the delay saying “it is outrageous that lobbying by four big Australian banks has resulted in this information being kept from KiwiSaver clients for another two years.”

He claims the banks told the minister it would cost $1 million to make systems changes so they could meet these disclosure requirements, however "over the next 12 months, these banks will charge $160 million in hidden fees to their KiwiSaver clients."

 

 It is important that they contain the key information
investors expect and are entitled to, including information about fees.
18. There is currently no requirement to provide information about fees in annual statements. In
the absence of regulatory requirements many providers are only disclosing the fixed member
fee (average member fee is $32 per annum) on the annual statement and do not disclose the
other fees that are charged to the fund. The partial disclosure of fees in annual statements can
lead consumers to assume they are paying fewer fees than in reality. These fees are not
insignificant: in the ye

Tags: KiwiSaver

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