AFA concerns on back-burner for now

Financial advisers who raised concerns about KiwiSaver have been told a review of default provider arrangements will consider those issues – but not until next year.

A group of AFAs, headed by John Cliffe, wrote to Commerce Minister Kris Faafoi, Finance Minister Grant Robertson, Reserve Bank Governor Adrian Orr and FMA chief executive Rob Everett.

The advisers want all default funds to be balanced options, to ensure IRD gives default managers the correct tax rates for members, to remove all members in a default fund after 12 months by switching them out, and to introduce a white-labelled government balanced fund for those members.

They said banks had been the big winners out of the retirement savings scheme.

In response, Faafoi said he agreed KiwiSaver was essential to improve New Zealanders’ wellbeing in retirement and it was crucial to get the settings right.

“Next year the Minister of Finance and I will start a review of the default provider arrangements, recognising that the current appointments expire in 2012. The review will include consideration of the default provider settings and will enable us to consider many aspects, including the points you have raised.”

NZ First’s KiwiFund Bill, which would have had a working group set up to investigate a government-owned and run KiwiSaver provider, has been withdrawn.

But its backer, Fletcher Tabuteau, will be involved in the review of default funds, which may indicate the idea has not been as completely abandoned as some have suggested.

Cliffe said he expected the review to be the subject of greater focus over the coming year.