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Choose SuperLife's KiwiSaver scheme
KiwiSaver lets each person choose which KiwiSaver scheme their KiwiSaver savings will go to. There are 30+ KiwiSaver schemes to choose from. Each has their own investment options. For many, choosing one scheme over another will be hard. Many employees look to their employer for guidance.
What is important
As a general principle, the better KiwiSaver schemes are the ones where:
- the total fees are low not just the headline administration fee;
- there is independence between the Trustee and the investment managers;
- there is maximum flexibility in terms of changing investment options and the investment options available;
- there is a history of innovation to remain competitive;
- it is core business
- have a similar non-KiwiSaver scheme available to help people manage their total savings requirements.
A scheme with low fees, independence, flexibility and innovation of a specialist will likely be best. It will also reduce the risk to an employer of selecting a chosen scheme.
Low total fees
Understanding the fees payable is hard. While it might be easy to understand the dollar amount of the administration fee, the trustee fee and the disclosed investment manager fees, there will be a range of other fees that are not disclosed or that are hard to quantify. For example, many schemes will deduct not only audit costs etc. but also marketing costs. These could be significant particularly in the early years. Many will invest through other products and there will be fees payable in those other products that are not visible. Understanding these is difficult. Some, for example a bank or finance company, will invest in deposits with the parent bank or finance company. In these cases, the bank or finance company will make profits which are in fact costs, but those profits don’t have to be disclosed.
Over time, it may become possible to compare one scheme against another by looking at the net-of-tax and net-of-fee returns of similar options, but it will be many years before there is enough data and by then it will be too late - the higher initial costs will have been incurred.
A chosen scheme is important
Employees should choose their own KiwiSaver scheme. If an employee does not choose a KiwiSaver scheme, they are allocated to their employer’s chosen scheme if their employer has selected one. If not, they end up in a government-selected default scheme, randomly allocated to the employee by the IRD.
It is unlikely to be in the employee’s best interests to be allocated to a default scheme. Therefore employers should have a chosen scheme to protect employees who do not make a decision. SuperLife is an ideal scheme.
*SuperLife's KiwiSaver scheme (“SuperLife”) is a KiwiSaver scheme. It is provided by SuperLife Limited. SuperLife Limited also promotes an associated, flexible, registered superannuation scheme that provides access to a range of non-KiwiSaver savings and insurance benefits.
