Asteron KiwiSaver shuts, recommends Grosvenor

Asteron has closed its $33 million KiwiSaver fund and is recommending its 6200 investors transfer their money to the scheme run by Grosvenor

Thursday, April 29th 2010, 3:03PM 1 Comment

by David Chaplin

The closure of Asteron's KiwiSaver scheme, flagged by Good Returns a fortnight ago, marks the third provider to shut up shop after the Australian-owned EoSaver and union fund IRIS folded two years ago.

Sean Carroll, Asteron managing director, said the firm has recommended its KiwiSaver members shift to Grosvenor because it has a similar funds profile to the Asteron scheme.

"Grosvenor also ensures KiwiSaver investors deal through advisers," Carroll said.

He said under the terms of the deal, Asteron will receive a payment from Grosvenor for each KiwiSaver client transfer to help recover administration costs.

As well, Asteron members who make the shift to Grosvenor will be given a discounted administration fee for a period. Grosvenor will also pay a slightly higher trail commission to advisers than that offered by Asteron.

Asteron members have until May 31 to choose a new provider or they will be allocated to one of the six default KiwiSaver schemes.

Carroll said the decision to close the Asteron scheme was a "logical" one given the concentrated market.

"If you look at the KiwiSaver market, 95% of members are with the top seven providers," he said. "That leaves 45 or so other providers fighting over 5% in a market with very slim margins. There will be further consolidation."

According to Carroll, while the Asteron scheme, which has accumulated $33 million and about 6,200 clients since launching in 2007, wasn't yet profitable but "we weren't losing much money either".

He said while Asteron remained supportive of KiwiSaver for New Zealand it would now focus on its core life insurance operations.

Asteron's KiwiSaver money was largely managed by Tyndall Investment Management, which is owned by Asteron parent, Australian firm Suncorp.

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Comments from our readers

On 30 April 2010 at 3:44 pm Sam Hindmarsh said:

So it seems the recommendation of members to go to Grosvenor is just a means to protect the commissions of Asteron's brokers who by the sound of it, are also brokers of Grosvenor. The old commission-go-round. I would think Asteron members would be better advised to go to the Sorted site and look at who is giving them the best deal on fees. They have already taken the smart advice to join KiwiSaver, they don't need to continue to pay trail commissions for the rest of their membership of KiwiSaver!