Dunedin financial adviser Peter Smith has taken issue with
the Government's intention to retender for default KiwiSaver
''I do not see the point in retendering the default
providers. It suggests to me somebody who missed out last
time has been lobbying the Government.''
Mr Smith said the institution lobbying would be upset because
of the AXA/AMP merger, along with Tower now being part of
Fisher Funds, making it five instead of six default
Finance Minister Bill English and Commerce Minister Craig
Foss announced yesterday the tender process would begin later
The selection criteria would be the same as it was in 2006,
with one additional requirement, which is that prospective
default providers must demonstrate how they would offer
investor education to encourage default members to actively
choose their fund, Mr English said.
The conservative investment approach would remain and the
basic criteria for selecting default providers would remain
investment capability, corporate strength, administrative
capability, track record and stability, the ministers said.
If a current default provider was not reappointed, their
default members would be asked if they wanted to stay with
It was expected they would be reallocated evenly across the
appointed default providers if they did not want to stay.
Mr English said the aim of the default funds was to provide
stable returns and build confidence in KiwiSaver while
members actively considered the best fund for their
''The Government believes it should take a risk-averse
approach as the default provider arrangement is making
initial investment decisions on behalf of others.''
The conservative option, with no less than 15% and no more
than 25% of members' assets in growth assets, was most
consistent with a risk-averse approach, he said.
However, Mr Smith said while the default providers would
remain conservative, the scheme needed revamping with more
''The fact 22% of KiwiSaver members are still in default
schemes is a flaw in itself as they have not had any
To suggest the providers should provide education to default
members was another burden on the providers, and, ultimately
all KiwiSaver members, with increased fees.
Most providers did not have qualified staff who could provide
advice so it would have to be sourced out to other
organisations, he said.
''The whole thing seems a bit daft to me. Put the money into
educating those already in default schemes about the need for