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Fee and return transparency causes KiwiSaver switch spike

Thursday, 2 August 2018, 10:30 am
Press Release: Milford Asset Management

Fee and return transparency causes spike in KiwiSaver switches

The recent change in regulation requiring KiwiSaver Annual Member Statements to show investment returns and fees in dollar terms has caused a spike in KiwiSaver switches.

Milford’s KiwiSaver Plan, which is the largest non-default KiwiSaver Scheme in the country by funds under management, has seen switches into its KiwiSaver Plan from other providers double since the new transparent statements were released in June.

Milford CEO Troy Swann said “It appears the change in regulation is having its intended impact. It’s giving people more information on their KiwiSaver account, which allows them to consider whether or not they’re receiving good value-for-money.”

Milford prides itself on delivering good value-for-money for its investors. Milford’s Active Growth Fund is the top performing KiwiSaver fund since the inception of KiwiSaver in 2007, and Milford recently won Consumer NZ’s 2018 People’s Choice award for highest KiwiSaver customer satisfaction.

“What we’re seeing is people are now able to make more informed decisions on their KiwiSaver account. And those that are not happy are voting with their feet. This is a very positive step.”

Mr Swann did note that KiwiSaver members should still focus on long-term returns after fees. “One limitation of the Annual Statements is they only show returns and fees over the past year. Investors should use tools such as Sorted’s Fund Finder tool to get a sense for the net returns providers are delivering to their investors over the long term.”

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“Previously what we saw across the industry was that many KiwiSaver switches were being made based on simple convenience factors. Now that people are armed with more transparent information, they can do more research and more easily compare results. Helping them choose the best provider and fund for them.”

“Overall, this is a great result. Having more KiwiSaver investors switch out of default funds and into more suitable funds for their needs creates more competition and will make all providers step up their game.”