Research firm SuperRatings has released ratings for New Zealand KiwiSaver schemes.
“After researching the New Zealand KiwiSaver market for more than two years, SuperRatings has now released its formal 2015 ratings, awarding 8 Schemes its highest Platinum rating.”
SuperRatings says that the KiwiSaver system has “achieved a great deal” in only eight years of operation.
SuperRatings modified the tools currently used to assess Australian super funds for the New Zealand KiwiSaver market accounts, moving “beyond investment performance and fees, providing a far broader assessment of Schemes than is evident in the market currently.”
The SuperRatings KiwiSaver ratings include consideration of:
- investment performance and fees
- member servicing
- education and advice
“KiwiSaver is a highly efficient retirement system and our analysis shows that operating costs remain economical, allowing providers to offer well-developed products at a very reasonable cost,” said SuperRatings CEO Adam Gee.
It is evident that the role played by the IRD [New Zealand Inland Revenue] is critical in maintaining the efficiency of the system and the overall cost-effectiveness of KiwiSaver Schemes in comparison to other global retirement systems. In addition, the use of a single account for each individual adds further efficiencies to the system, mitigating the multiple account issues currently evident in Australia.
SuperRatings found that engagement with KiwiSaver is very high, with “around 80% of members actively choosing a Scheme or investment option.” In Australia almost 80% of members remain with their default superannuation fund.
Mr Gee said a factor in this level of engagement is the ability to use KiwiSaver for a first home purchase, which has “driven engagement in younger age groups, ensuring higher levels of interest amongst this demographic.”
Compared to the “relatively homogeneous” investment options in the Australian superannuation system SuperRatings found “material divergence in investment structures across KiwiSaver providers.” While this provides greater consumer choice it also makes comparisons between schemes difficult.
There was also “large variances” in governance of KiwiSaver schemes.
“Whilst governance is strong across the majority of Schemes, we are fully supportive of the changes to the governance requirements announced by the Financial Markets Authority and believe that the additional obligations placed upon Trustees will further develop oversight practices and provide for the greater security of Scheme assets,” said Mr Gee.
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