Dunedin financial adviser Peter Smith has taken issue with the Government's intention to retender for default KiwiSaver providers.
''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 providers.
Finance Minister Bill English and Commerce Minister Craig Foss announced yesterday the tender process would begin later this year.
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 that provider.
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 individual circumstances.
''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 growth orientation.
''The fact 22% of KiwiSaver members are still in default schemes is a flaw in itself as they have not had any advice.''
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 growth.''
