BNZ last major bank to enter KiwiSaver business

ELOISE GIBSON
Last updated 05:00 23/01/2013

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BNZ is entering the KiwiSaver business, the final major bank to do so.

BNZ Investment Services Ltd confirmed it has registered a KiwiSaver Scheme and plans to register a prospectus in the next few weeks.

The bank would not say whether it would join Kiwibank and Westpac in seeking Government approval to become a default fund - the conservative, low-fees options into which savers are put if they join without picking a scheme.

Even without default status, BNZ could harness its branch staff to poach customers from other schemes and sign up new members, said Chris Douglas, Morningstar's co-head of fund research. "We've seen how powerful that has been for Westpac."

Despite new enrolments across KiwiSaver slowing, Morningstar's latest rankings show Westpac last year overtook all default funds bar two - fellow banks ANZ and ASB.

Together the three banks account for more than half of funds in the $13.6 billion scheme.

BNZ could also gain instant scale by buying an existing provider, such as Tower, Douglas said.

Tower, a default provider with an estimated $894 million under management, is undergoing a strategic review of its assets.

The Government is reviewing the default provider arrangements, including considering whether to put undecideds in "life stages" funds. Those funds assume younger people are better off long-term holding mostly shares and progressively upping their portion of more conservative bonds and cash with age.

The disclosure regime for KiwiSaver fees and performance is also changing to help investors fairly compare schemes.

Douglas said the new disclosure regime should allow Morningstar to cover all of the big providers, including Kiwibank-owned Gareth Morgan Investments and Superlife.

The two providers have disagreed with Morningstar's comparisons and declined to take part in its quarterly reports.

Morningstar's latest quarterly survey showed shares padded the Christmas stockings of KiwiSavers last year, with a pre-holiday rally rounding off a strong year for growth assets.

Conservative fixed-interest investments in cash and bonds were eclipsed in 2012 by shares and listed property, helping put growth and balanced funds on top over three years.

WHO, HOW MUCH

Morningstar's KiwiSaver database at a glance:

16 providers $13.6 billion under management

2 biggest providers, ASB and OnePath combined, control 46 per cent of assets

$5.1b in Conservative funds, with $1.5b of that in a single ASB fund.

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- BusinessDay.co.nz

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