ASB CEO talks compulsion, contribution and PE in KiwiSaver
ASB CEO Vittoria Shortt would like to see change when it comes to KiwiSaver policy and is interested in developing the product.
Tuesday, August 20th 2024, 2:45PM 
2 Comments
by Andrea Malcolm
Shortt says she’s very happy with the scheme and the bank's strategic partnership with Blackrock as underlying asset manager has yielded pleasing results which will be evident when it puts out its investing climate report.
This year ASB KiwiSaver members have made $1.7 billion in contributions and investment returns have seen the fund grow by $1.5b, she says.
On the policy front she would like to see KiwiSaver made compulsory and changes to contribution rates. She says both of these have made a massive impact in Australia and I think New Zealand could do the same.
From a provider perspective, it will be interesting to see what different investment categories will open up at scale, as in Australia.
“We want to make sure KiwiSaver conversations are as simple and easy as possible so we are removing barriers from people thinking about saving for their future, because it's not easy... it's not always front of mind for people.
“When they want a home, people are really clear that they want a home. But trying to convince people to think about their retirement when they're 20 is more challenging.”
Hence ASB is focused on helping people make small, everyday steps with their KiwiSaver.
As for private equity allocation in KiwiSaver, she is interested although it’s not something ASB has executed so far.
“I am genuinely interested in the development of KiwiSaver. And I guess, you just have to look across to Australia to see the ways that the big super funds are participating there. I'm interested in understanding what it takes to, in an appropriate way, participate in supporting the country, so yes although we haven’t done anything specific.”
Currently ASB is neck and neck with Fisher Funds in the battle for KiwiSaver market share. Morningstar’s KiwiSaver report for the second quarter of this year put ASB in third place, just behind Fisher, both with 15.1% of the market and assets of $16.8b each.
Fisher outdid ASB for fee revenue with $160.1m compared to ASB’s $100.3m.
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. Allow kiwisaver balances to be split between providers
. Restrict the ease of transferring kiwisaver balances to - say a 3-month lag - to enable providers and manufacturers to invest in long term assets such as private assets
. Restrict the number of default providers being homogenous distributors for any single manager (eg: Blackrock has inadvertently captured a sizable portion of the Kiwisaver market, exposing the industry to systemic risk).
. Replace the restrictive 'value for money' initiative with a 'get what you pay for' initiative. If investors choose to select an active provider, then this has the appropriate fees attached.
. Aspire to grow Kiwisaver contributions to - say - a compulsory contribution of 10% of gross employee income over the next 15 years. Whilst the current 3% elective contribution (+3% from the employer) is better than nothing, it's hardly going to be a life changing outcome for retirees.
. Whilst contentious - remove the ability for Kiwisavers to draw against their retirement savings to purchase their first home.
Food for thought...