KiwiSaver fees top $36 million
KiwiSaver providers just over $36.6 million in fees and expenses over the 12 months to March 31 this year, according to the latest report from the Government Actuary (GA).
Friday, October 16th 2009, 5:39AM
by David Chaplin
The KiwiSaver report, tabled in Parliament on Wednesday, revealed the GA had also rejected an argument that smaller schemes could raise fees "if low membership meant that such an increase was necessary to cover the expenses".
The GA judges KiwiSaver fees on the basis that they be "not unreasonable".
In another major ruling during the year, the GA said its approval of KiwiSaver fees "does not in itself provide tacit approval of any form of investment".
The report says KiwiSaver trustees must ensure all investment options meet legal requirements. As well the GA paper says providers must get written consent from members for investing in "complex" options.
"... if the investment option is complex then I would expect the Trustee to obtain written confirmation that the potential member understands the particular investment risk," the GA report says.
About half of all KiwiSaver funds were invested in default funds as at March 31, which the GA says was probably an advantage during the global financial crisis.
"... it is hoped that as members see how the funds work in practice they will consider other investment options," the GA says.
The GA also highlighted a couple of other "minor issues" including some providers missing the 35-day deadline to transfer funds to another scheme following a member request.
It also says there are some issues of questionable selling practices which are being investigated.
In a further superannuation report, tabled this week, the GA notes KiwiSaver may be starting to cannibalise existing superannuation schemes.
While the trend for stand-alone super schemes shifting to master trusts has continued the report says others are closing in favour of KiwiSaver or splitting contributions.
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