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Default KiwiSaver: Which providers are fighting to keep their status?

[Updated] Despite a shroud of secrecy from MBIE, Good Returns can report that 7/9 default KiwiSaver providers have applied to retain their status, with two notable exceptions keeping quiet.

Friday, February 5th 2021, 6:38AM 5 Comments

by Daniel Smith

It may well be the biggest shake up in the history of KiwiSaver.

As the KiwiSaver default fund providers which were appointed by the Minister of Commerce and Consumer Affairs expire on June 30, 2021, current default funds have had to re-apply to keep their status.

The secret of who is in and who is out is being closely guarded by MBIE. Even the number of default funds positions available has not yet been stated.

Regarding the number of available default funds, an MBIE spokesperson told Good Returns, “The number of KiwiSaver default providers that will be appointed will be determined following the outcome of the procurement process and the subsequent decision by ministers on the appointments.

“As set out in the RFP documentation, there is a preference to appoint a minimum of five default providers, with a higher number appointed only if doing so will not reduce value for money.”

The nine current providers are AMP, ANZ, ASB, BNZ, BT Funds (Westpac), Fisher Funds, Booster, Kiwi Wealth (Kiwibank) and Mercer.

AMP has confirmed that it has reapplied for default status with Blair Vernon, chief executive of AMP Wealth Management telling Good Returns that, “As a default KiwiSaver provider since 2007, we have the experience, track record, capabilities, and client-focus to continue to serve as a default KiwiSaver provider.”

ANZ has also confirmed that it reapplied, alongside Kiwi Wealth, Westpac and Mercer.

Fisher Funds has also applied, with a representative telling Good Returns that “KiwiSaver is a core part of the Fisher Funds business and with a passion for getting great outcomes for our clients, default status is an important part of that picture.”

Booster also confirmed their application, telling Good Returns that it is “hopeful we will get the opportunity to keep helping Kiwi’s during the next KiwiSaver default term”.

There are two notable exceptions from the previous nine default members. Both ASB and BNZ refused to comment on whether they have reapplied to retain their default status.

Whether they have applied or not will be revealed once the minister makes a decision on which funds will carry on with default status.

It is unclear whether new providers will seek default status. One rumoured to be bidding for a place on the list is Sam Stubbs' Simplicity which currently has more than $2.6 billion across all its funds.

Stubbs gave a firm "no comment" when approached by Good Returns.

Those funds that achieve default status this year will have a lot more responsibility than in previous years. The Government has proposed a mandate for default schemes.

The new default funds will have to:

  • exclude investments in fossil fuels and illegal weapons
  • publish a “Responsible Investment” policy on their website
  • change the investment mandate from conservative to balanced fund
  • promote fee transparency and use the procurement process to put pressure on fees
  • engage with their members to help them make informed decisions about their retirement savings.

If a previous default provider is not reappointed, they will be required to reassign their non-active default members among the appointed providers (on a sequential basis in accordance with the KiwiSaver Act 2006).

Tags: AMP AMP Wealth Management ANZ ASB BNZ Booster BT Funds Fisher Funds kiwi wealth KiwiSaver Mercer Westpac

« MJW KiwiSaver survey reveals balanced and growth fund overlapsIRD to fork out $6.6 million for KiwiSaver pay delay »

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Comments from our readers

On 5 February 2021 at 8:52 am Elephant1 said:
I would question , the role that two or three managers are playing .As they have huge levels of funds in the default funds and clearly are not on a regular basis reviewing their clients interests. ASB and AMP, must clearly show that they are guiding their investors , otherwise as an industry we must hold the FMA to account.
On 5 February 2021 at 10:10 am Contrarian said:
At the 11th hour, AMP magically decided to change their investment approach to passive, presumably to reduce fees and retain their Default status. How does this make up for years of high fees and pathetic returns...?!?
On 6 February 2021 at 9:48 am Austin Fisher said:
Passive, index-tracking fund managers would probably find it hard to offer a low cost fund that meets the brief.

Being a default fund provider in the early years was important for providers but now that we are in 2021 there’s not so much at stake now. We may end up with some non-default passive funds having lower fees.

On 6 February 2021 at 12:47 pm Gordon Gecko said:
I understand that it was made explicitly clear on numerous occassions that managers taking part in the default tender process were under strict confidentiality rules.

At least ASB and BNZ understand confidentiality in a tender process, good on them.

Public lobbying like this (AMP, Fisher and Booster) should be dealt with by exclusion from the process, and the others probably think they are too important or too big to behave properly. Maybe they don't understand or care how important confidentiality is. I hope they take better care of their customers personal information.
On 9 February 2021 at 10:19 am MJContend said:
Looks like 7 out of 9 don't know how to read the terms of the RFP process. Well done BNZ and ASB.

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 5.95 6.40 6.59
ANZ Blueprint to Build - - - -
ANZ Special - 5.35 5.80 5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - 5.35 5.69 5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 5.95 6.29 6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 ▲5.35 ▲5.85 -
Heartland Bank - Online 4.10 ▲4.90 ▲5.29 ▲5.59
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Heretaunga Building Society 6.10 ▲5.35 ▲5.80 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
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Nelson Building Society 6.45 5.55 6.15 -
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TSB Special ▲5.50 ▲4.85 4.99 ▲5.65
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Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
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Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.87 5.35 5.72 5.99

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