BNZ rules out Tower KiwiSaver

ELOISE GIBSON
Last updated 16:02 01/02/2013

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BNZ, owner of the newest KiwiSaver scheme on the block, has ruled out a tilt at Tower for now but remains open to purchasing another existing scheme.

Tower has been going through a strategic review of its businesses and is understood to be entertaining three potential buyers for its funds management business.

BNZ acting CEO Anthony Healy says the initial focus when BNZ's scheme goes live on February 25 will be switching BNZ customers from other schemes and joining up new members.

"Our primary approach will be to talk to our customers about KiwiSaver," he said. He "wouldn't close the door" on purchasing an existing KiwiSaver business, but confirmed the bank was not currently considering buying Tower's funds business.

Healy was confident the bank would attract new KiwiSavers to sign up to its Russell Investment-managed scheme, despite new signups to the voluntary scheme slowing steadily last year and slumping sharply in December. Up to 45 per cent of eligible people were not KiwiSaver and still might be persuaded to join, he said. "I don't don't think December was an indication of a slowdown ... there is still a lot of educating to do." A registered prospectus for the BNZ scheme reveals management fees will sit about the middle of the pack for their risk profiles for each of BNZ's KiwiSaver options of conservative, moderate, balanced, and growth.

The membership fee of $2 a month is $9-12 a year cheaper than existing default funds.

An "innovative product" that would attract new members was also due for launch in three to four months, said Healy.

Prospective members will be able to join on the spot using BNZ's internet banking facility, as well as make voluntary contributions and switch risk profiles .

Listed insurer Tower's role as a default KiwiSaver provider could be a complication if the company sells its investment arm.

It is understood three potential buyers are in the frame, but none can acquire Tower's default provider status without approval from the government.

Market sources say the three include a New Zealand consortium involving Fisher Funds and TSB Bank. The other two are said to be a boutique Australian fund manager and a large Australian financial institution.

BNZ confirmed that it would like to become a default fund in its own right.

Even without default status, commentators have noted that BNZ could harness its branch staff to poach customers from other schemes and sign up new members, as Westpac has done.

Morningstar's latest rankings show Westpac last year overtook all default funds bar two - fellow banks ANZ and ASB.

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

- BusinessDay.co.nz

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