Advisers don't have role in KiwiSaver
The role of financial advisers in the new KiwiSaver regime looks like being left to the market.
Wednesday, March 1st 2006, 2:14AM
by Rob Hosking
Finance Minister Michael Cullen says there will be a publicity campaign around KiwiSaver when it is launched but that is about it.
Cullen’s office says that, in cases where employers have not chosen a superannuation provider, the Inland Revenue Department will provide addresses for the default provider so they can approach employees of those firms.
"Ultimately though it’s up to the employer whether they approach financial advisers or not."
The wider scope of the scheme is clearer with the introduction of the legislation, but some key parts are still to be negotiated with the financial services industry.
The Treasury has estimated the costs of the scheme to be $700 million over the first five years.
That includes the housing subsidy – which is about $16.5 million a year – plus a subsidy on the scheme’s fees. Ministers and officials are still negotiating with the industry over the level of subsidy.
The $700 million is based on a take up of 25% of the workforce by 2012. Employees are automatically enrolled when they change jobs: they can though opt in from when the scheme starts on 1 April 2007.
“Obviously there are fiscal risks, both up and down, around that figure. I would be delighted if they were on the upside and we got an even better uptake that would mean we were really starting to do something about the level of saving.
Even 25% is I think quite an ambitious estimate.”
There will be four or five default providers – Cullen says there is no firm number on that yet.
He expects those providers will offer low risk savings vehicles.
The scheme has received a guarded tick from the industry.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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