KiwiSaver fees should be published in easy-to-read dollar terms, Government says
KiwiSaver providers are a step closer to being forced to publish their fees in a way consumers can understand.
The Ministry of Business, Innovation and Employment (MBIE) has released a consultation on proposals which would force KiwiSaver providers to publish annual statements in a form that ordinary people can get their heads around.
That includes stating in dollar terms the fees that have been charged, as well as giving savers an estimate of the balance they can expect to have at retirement.
The proposal is based on survey work done by the Financial Markets Authority (FMA), which found most people wanted the annual statements sent to all KiwiSavers to show fees in dollar terms, not in difficult to understand percentages.
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"We know that making financial decisions can be difficult and a large number of New Zealanders fail to make good decisions about their retirement savings," the MBIE consultation document read.
"Many New Zealanders stay in KiwiSaver default funds without considering whether another fund might better suit their circumstances, and they contribute minimum amounts to their retirement savings."
"These decisions, or often lack of decisions, mean New Zealanders risk missing out on having an optimal outcome from their private retirement savings."
It showed the total fees charged set out as a dollar amount.
The investment returns were also expressed as a dollar amount, so KiwiSavers would be able to see how many dollars of return they have got for every dollar of fees paid.
It also contained a box showing an estimate of the lump sum the KiwiSaver would have saved by the age of 65.
It also had suggested actions the saver could take to potentially increase their savings at retirement, including changing fund, or increasing contributions.
Sam Stubbs, founder of the low-fee Simplicity KiwiSaver scheme said: "This is just what the market needs."
He said the MBIE mock-up was "very clear on fees in dollar terms".
"It seems that the Government is listening to KiwiSavers, who deserve this sort of transparency."
"We are very supportive of this in principle," he said.
Stubbs said making fees more visible would challenge some of the high-fee KiwiSaver business models.