[Weekly Wrap] KiwiSaver advice addressed again
About a quarter of the two million KiwiSaver members are still in default schemes, giving little - if any - thought to their investments.
The Government has weighed in on this, this week. It has finished its review of the default provider system and decided that it will not change the requirement that default schemes be managed conservatively.
This has upset many people who thought that it would be sensible to change to a life stages approach, where people are assigned risk relevant to their age. That obviously has some drawbacks, such as for people who want to be able to withdraw some money for a first home, but people who are invested too conservatively can miss out on hundreds of thousands of dollars in returns.
One of the things that I thought most interesting about the review was the requirement that providers offer impartial advice and education to their default clients. As part of the tender process to decide the default providers for the next seven years, they'll have to show how they plan to do that.
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