Until the dawn of KiwiSaver in July 2007, New Zealand’s retirement savings market was in a dark place. Unloved, the country’s superannuation business lay slowly gathering mould over decades of unincentivised neglect. According to the latest report from the office of the Government Actuary (which supervises the sector), from the end of 1990 until December 31 last year total funds under management in superannuation schemes (including both retail and employer-sponsored funds) grew by less than NZ$6 billion to reach a miserly $16.7 billion at the end of that period. Over the same time superannuation scheme membership numbers (including both active and pensioner members) actually shrank from just under 550,000 in 1990 to 512,123 by the end of December last year. KiwiSaver changed all that.
As at September this year about 1.5 million New Zealanders were members of a KiwiSaver scheme with that number still growing at the rate of about 1,000 per day. Even allowing for the fact that about 40 per cent of current members do not regularly contribute, KiwiSaver has been a resounding popular success (see breakout story). But with more than 50 schemes vying for the attention of Kiwi savers, the commercial success of individual providers has been much harder to judge. After three years in operation, however, some clear patterns are emerging in the KiwiSaver market, which my third annual survey of individual schemes reveals (see table for the top 10 schemes). The report tracks the performance of the majority of KiwiSaver schemes across a range of metrics including: member numbers, funds under management, fees and expenses, and, transfers to and from other KiwiSaver schemes.
The study, based primarily on data sourced from annual reports for the year ending March 31, 2010, covers 41 KiwiSaver schemes, which includes all those open to the public as well as several industry and union-based schemes. Corporate-only KiwiSaver schemes, which are usually ‘bolted-on’ to existing in-house super offerings, have been excluded and anyhow make up only a tiny proportion of the market. The research highlights a significant difference between KiwiSaver and the Australian superannuation market: employers, unions and other industry/professional groups have almost completely failed to exert any influence on New Zealand’s rebooted retirement savings market. The 2009 exit of Eosaver, the scheme backed by Australian firm Eo Financial Services, demonstrated early on that Australia’s industry superannuation model was not easily grafted onto KiwiSaver. Eosaver, the first KiwiSaver scheme to fold, was followed soon after by the NZ union-owned IRIS scheme.