ING's Kiwisaver fund cracks $1bn

ING's Kiwisaver funds under management now exceed more than $1bn

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Money manager ING is quietly goading its rivals after becoming the first KiwiSaver provider to break the magical $1 billion mark for funds held under management.

As of the end of November, ANZ National Bank-owned ING's KiwiSaver coffers topped $1.02b, while membership exceeded 283,000  over a fifth of the 1.25 million Kiwis signed up to the scheme.

But the news came as little surprise to superannuation specialists who said that ING's success showed what could be achieved by money managers if they exploited the right distribution channels.

``From the off ING has looked after ING, ANZ and National Bank, so they've effectively tapped into the two key parts of KiwiSaver distribution: the employer sponsored schemes, which is what ING does, and the banks,'' said Eriksen & Associates' Jonathan Eriksen.

``ING was chosen as one of the six default providers at the start so will always benefit from the flow through of new members. And KiwiSaver is a natural product for the banks to sell and it has two of the five.''

ING currently runs four schemes: its default offering, with $262m funds under management, the SIL with $349m, National Bank with $232m and ANZ at $159m.

Head of KiwiSaver distribution David Boyle said it would be wrong for ING to overlook the significance of being selected as a default provider but some of the company's peers that were in the same position had failed to capitalise on their role.

``It certainly has contributed to our success, but there are five other default providers out there that have had the same opportunity to grow their membership and they haven't done so well,'' he said.

Although KiwiSaver has exceeded all expectations since its launch in 2007, two-thirds of the 3.8m eligible New Zealanders have not yet joined the voluntary work-based savings scheme prompting providers to forecast more strong growth moving forward.

``If they keep signing up at the current rate of 30,000 a month then KiwiSaver will go from strength t strength,'' said Mr Boyle.

Looking forward to 2010, Mr Boyle said KiwiSaver providers could benefit further from new trans-Tasman portability rules that will allow Kiwis returning home from Australia to bring their retirement savings with them.

New Zealanders working in Australia make compulsory superannuation contributions and the savings are locked into the scheme until the saver reaches retirement age. But from July, Kiwis returning home prmanently will be able to transfer their savings into KiwiSaver.

The heavily tipped consolidation of providers was also picked to pick up pace in the new year driven by high compliance and running costs in what is little more than a ``numbers game''.

``It's very busy at the moment with people sounding each other out. Everyone wants to buy everyone else but nobody actually wants to sell,'' said Mr Eriksen.

- © Fairfax NZ News