KiwiSaver prep a moving feast
One of the things it appears industry leaders are in agreement on at the moment is that KiwiSaver will be good, however it is becoming clearer now that getting ready for the April 1 start date next year is going to be difficult.
Wednesday, June 28th 2006, 6:58AM
"KiwiSaver is a huge positive," Westpac's New Zealand chief executive Ann Sherry said. Meanwhile Fidelity's Milton Jennings urged advisers to get behind the scheme and he suggested it may help grow the group life market.
However, getting ready in time is going to be hard. Chapman Tripp says in its recent SuperScoop newsletter that getting ready for the introduction of KiwiSaver will be difficult.
It has looked at the RFP for default providers and said the tender process will be something of a "moving feast" as key features of the bill and its design will change during the Parliamentary process.
Any finality on the bill won't be known until it is signed into law, possibly around October this year.
It says there are likely to be about four default providers and their term of appointment will be seven years.
While many have suggested the default investment products (allocated to those who choose not to opt out of KiwiSaver and make no selection on what savings scheme they want to use) will be low risk products that is not true.
Instead of looking like a cash fund, a default scheme has to have between 15 and 25% of its assets in growth investments.
With fees the Crown will make a contribution and these will be paid to the investors. These fees will continue to be paid even if a member has taken a contribution holiday.
"It is unlikely that the amount of the Crown fee contribution will fully cover all of the fees for each KiwiSaver scheme, but it does exceed the actual fee levels than members will be able to keep the excess," Chapman Tripp says.
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