New Zealand’s KiwiSaver industry is now at the point where the competitive spirit is blossoming – with about $5 billion at stake now and a, more or less, guaranteed growth path for the next 20 years, scheme providers are jockeying for position.
The energetic way competitors pounced on the Huljich KiwiSaver scheme, for example, after its rather loose disclosure regime was disclosed to the public last month, shows the game is getting serious now.
But, with the exception of two scheme closures last year – Eosaver and the union-based IRIS KiwiSaver fund – the mooted sector consolidation has not happened.
In fact, a number of new KiwiSaver providers are waiting in the wings. KiwiBank, for example, is expected to launch its new offering shortly after ditching KiwiSaver ‘partner’ Mercer last year. Others, including New Zealand Funds Management and the nascent Perpetual Asset Management are also understood to be considering how to break into the KiwiSaver market.
But if new niche players are drawing up their game plans, others may soon be pulling up stumps.
Simon Power’s promise last week to “tighten up KiwiSaver” – prompted by the Huljich scandal – could encourage others to rethink the logic of remaining a provider.
Whatever comes out of Power’s review, KiwiSaver providers will almost certainly face higher compliance costs. And for the majority already facing a big spend to remain in competition, that extra impost could end their innings sooner, rather than later.
Workplace Savings NZ (the group formerly known as ASFONZ), while supporting a review of the sector, asked the government not to drown providers in red tape.
But what else does government do?
Smaller providers are certainly mulling over their commitment to the great KiwiSaver dream.
For example, Sean Carroll, head of Suncorp Wealth Management NZ (which offers the Asteron scheme), says the group was regularly reviewing its KiwiSaver strategy.
Asteron KiwiSaver, with about $31 million under management and 6,100 or so members at the last count (December last year) would be classified as a marginal player and Carroll acknowledges it’s tough to justify the expense sometimes.
“We’re committed to [KiwiSaver] now but that’s not to say we won’t make a decision [to exit] in the future… we’re always looking at it,” Carroll told me.
Tags: David Chaplin, kiwisaver
Hi,
If a kiwisaver provider falls over because of these regulations then they are cetainly not one I would want to put my money in. I think the smaller operators may struggle but those are the ones with more risk (well in most cases). I don’t really see an issue with this at all and I think the title of this story is a bit of a joke quite frankly.
Richard
I think it’s another good article and well titled.
Richard I think you misunderstood a little here. It’s not so much the the regulations or non-compliance thereof that will make the smaller operators fall over, it’s the cost of them.
Further down the track it’s likely kiwisaver will turn into a bit of a cash cow but providers have to deal with the setup costs and low initial returns before they get to milk it. With Powers extra regulations come extra costs. Can the smaller operators survive to the profit times? It’s very true that these changes could be the end of the dream for some.
[...] some providers the game is getting far too serious. As I hinted in a previous blog, Asteron is very close to pulling the plug on its KiwiSaver scheme, which carries the slogan [...]