Default providers announced

[UPDATED] There will be nine KiwiSaver default providers in the next seven-year term, it was announced this morning.

Friday, March 28th 2014, 9:26AM

This time, all of the major banks are among the default offers.

AMP, ANZ, ASB, BNZ, Grosvenor, KiwiBank, Mercer, Fisher Funds and Westpac have been appointed.

BNZ, Westpac, Grosvenor and KiwiBank were not default providers in the original seven-year term. TOWER was, and was bought by FIsher Funds.

The announcement follows a process that began last year. Tenders were assess by an independent panel according to a range of criteria, including the provider's organisational and investment capabilities and fee levels.

Sources said the restrictions on default schemes' fees had been a sticking point for some in negotiations. They will have to be lower than the current default provider fees, in particular for people with small fund balances.

For a typical $7000 balance in the new default funds, the total fee will be on average about $56 a year compared to the current average fee of around $69. There are currently 2.2 million KiwiSaver members with about $20 billion funds under management. About 22 per cent of all KiwiSaver members are in default funds.

Providers also had to show how they would offer investor education.

ANZ Wealth managing director John Body said it was positive that there was no significant change to the structure of the scheme.

"In terms of fees and costs, KiwiSaver is well-placed in comparison to other global superannuation and funds management services. Relative to the scale of the assets under management in the New Zealand market, KiwiSaver offers good value. The main focus for providers now is to deliver improved education tools and communications to customers. We'll be helping default customers to engage more with their plans for retirement and how to manage their retirement savings."

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