AMP to consolidate KiwiSaver schemes

Last updated 11:19 21/02/2013

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AMP has confirmed it will merge the two giant KiwiSaver schemes it operates which hold money on behalf of more than 260,000 savers.

When AMP bought AXA it ended up in the unusual position of having two default KiwiSaver schemes, the AMP-badged scheme and the AXA scheme.

Many expected them to merge in time, and AMP has confirmed that will happen by late July or early August.

Under the terms of the proposed transfer, all existing AXA KiwiSaver Scheme customers will be transferred to the AMP KiwiSaver Scheme, and investors with money in the AXA scheme will receive a transfer pack in May including full details of the proposed transfer process.

The AMP scheme will be "enhanced", AMP said, but exactly how that will happen has not yet been disclosed.

AMP's New Zealand boss Jack Regan said the consolidated KiwiSaver scheme would adopt the AXA-style multi-manager investment approach. 

The merger means AMP will lose some funds flow as it will no longer get two in every six new default KiwiSavers who opt to let the IRD randomly allocate them to a scheme rather than choose a scheme themselves. Instead, it will get one in five of the default KiwiSavers.

From 22 February, the AXA scheme will no longer accept new KiwiSavers, and will not get any more default allocation.

The news comes as AMP Financial Services New Zealand reported an underlying operating profit after tax of $119 million for the year ending 31 December 2012, compared with $120m the previous year.

Despite the slight profit drop, AMP said its margins had improved on top of higher revenues in the second half of the year following growth in assets under management as a result of improved investment markets as well as reduced operating costs.

Increased prices for insurance policies and growth in life insurance premiums helped boost annual premium income (API) by 4 per cent to $298m. But claims were also up, particularly among life insurance and income protection insurance policyholders.

Eleven per cent of its policies "lapsed" in the year, a term used when people either decide they do not need them any longer and stop paying, or choose to transfer them to another insurer.

Regan flagged further premium price rises as a result of tax changes brought in after a review by the taxman which found that insurance companies were paying too little tax.

"We've acted prudently in implementing incremental life insurance premium price increases to mitigate the impact of future tax changes."

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- Sunday Star Times

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