tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, September 24th, 10:50AM

News

rss
Latest Headlines

Strong response expected to KiwiSaver default review: Govt

Government officials expected the discussion paper proposing reform of the KiwiSaver default fund arrangement would provoke "full and rigorous debate", a cabinet paper reveals.

Friday, September 20th 2019, 6:00AM

The Ministry of Business, Innovation and Employment has released the document issued to cabinet ahead of the discussion document's launch.

It said that the wide-ranging questions asked of the KiwiSaver scheme could be expected to spark a reaction.

"In terms of mitigating the risk of strong stakeholder responses, the discussion paper makes it clear that we are consulting on all options and invites submitters to put forward options not set out in the discussion paper."

The paper sets out options for change including the possibility of default funds taking "life stages" settings, requiring a specific level of investment in New Zealand capital markets, and an increased focus on fees.

One of the key issues that has caused that predicted concern is the suggestion that default providers should have to meet ethical obligations.

“One view is that there is public interest in responsible investment, and that it is appropriate for the Government to change the default provider settings to achieve this. Several stakeholders have said that the current requirements for responsible investing are not robust enough, and that there should be stricter responsible investment criteria in the default provider settings. This could function as a lever to promote responsible investing across all KiwiSaver funds, and indeed, across other investment funds.”

Its consultation paper said there was evidence that KiwiSaver members would support this – a survey showed 72% of New Zealanders expect their investments to be made responsibly and ethically.

Options proposed included requiring mandatory exclusions of certain industries or companies or a standard disclosure format for responsible investment.

But Alister Van Der Maas, managing director of Russell Investments in New Zealand, said ethics were a personal belief.

“If you’re an individual it’s easy but if you’re a super scheme or a KiwiSaver provider offering a product how do you define ethics?

He said there was a lot of variation in the approach of default funds and if people had not made an active choice to be in a particular fund they could end up with a quite different outcome just by virtue of the scheme they had ended up in.

Implementing responsible investment requirements would add further variability.

“My concern is that everyone will define it differently and default members could end up with different outcomes.”

It was hard to say how a responsible investment slant would affect performance, he said. Research had shown that portfolios could exclude about 2% of the MSCI before it affected returns – a level that was reached for most KiwiSaver members already by existing screens, he said.

Tobacco as an industry had outperformed over the past 20 years and only fell back in the last two or three, he said. “Taking it out two years ago was not a bad decision but if you took it out 10 years ago it possibly could have been.”

Simplicity founder Sam Stubbs said there was a lot of virtue signalling in ethical investment, “Where do you draw the line? It’s hard to objectively say what is ethical … Is Facebook a virtuous company or a vice company? We are a not-for-profit trying to be as ethical as we can and I’ve got to be honest and say that it is a minefield of subjective opinion.”

But he said it was “almost certain” that returns would be the same with a responsible or ethical approach.

David Boyle, head of sales at Mint Asset Management agreed it was hard to define ethical investment. “But to say it’s too hard is a bit of a cop-out as well.”

He said consumer expectations should become clearer as more people became aware of the issue.

Tags: Alister Van Der Maas David Boyle ESG ethics fees KiwiSaver MBIE Mint Asset Management responsible investing Russell Investments Sam Stubbs Simplicity

« BNZ's wealth shakeupAmbitious Australian trustee firm makes kiwi push »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Time is running out for 2000 unregistered advisers
    “I suspect there will be some advisers who have assumed they will be welcomed by FAPS with open arms, only to be disappointed...”
    2 days ago by John Milner
  • FSC offers info hub for advisers
    “lol....I wouldn't say I've only just noticed Murray. More a matter of eventually wondering "am I the only one who thinks...”
    2 days ago by Tony Vidler
  • FSC offers info hub for advisers
    “@Tony Have you only just noticed FSC's push to take over and control adviserland? IMHO it's been increasingly happening...”
    3 days ago by Murray Weatherston
  • FMA details Covid-19 response
    “So my immdeiate question here, is how is this different to the earlier article from G Boyes. An adviser didn't classify the...”
    6 days ago by smitty
  • FSC offers info hub for advisers
    “I admire Richard and the work he has done since taking on the FSC role, however I am confused by this increasing noise by...”
    6 days ago by Tony Vidler
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 ▼2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com