Invitations to become default providers out
Financial services firms who want to be considered for the default provider role with KiwiSaver have been invited to register their expressions of interest.
Wednesday, March 22nd 2006, 10:39AM
by Rob Hosking
The default provider role in KiwiSaver, meanwhile, is likely to become a vital issue.
Finance Minister Michael Cullen has said the government expects to have “four, maybe five” default providers.
If the Australian experience is anything to go by, most employers will not chose a provider but will simply leave the issue to the randomness of the default provider option. As Good Returns reported recently, officials expect the bulk of the business generated by KiwiSaver to be confined to the default providers.
In Australia, as much at 90% of the business generated by that country’s compulsory superannuation scheme went towards the default providers, although that has more recently been tempered by opening up the scheme to choice.
Default providers will have to offer a full range of services, including independent trusteeship, scheme administration, investment management and custodial business functions.
They will be able to set up a consortium to provide these services.
Default investment products are required to have “a conservative investment risk profile”.
No detail on fees has been provided, however they will have to be “competitive”, across the range of products, “in particular in relation to the default investment product”.
Deadline for registrations of interest is 7 April: requests for proposals will be made in late April. Successful applicants will be announced in October.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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