A finance expert says the Government needs to be doing more to put pressure on KiwiSaver providers after just two out of nine default providers cut their fees in the wake of a government review.
ANZ - the country's largest provider - has sliced its fees by 2 basis points across its funds while Kiwi Wealth - which is owned by the government, ACC and the NZ Superannuation Fund - has dropped its default fund fee by 5 basis points.
But the other seven default providers - ASB, AMP, Westpac, BNZ, Booster, Fisher Funds and Mercer - have made no changes to their fees.
Ayesha Scott, a finance lecturer at AUT, said while she welcomed the fact that the KiwiSaver providers were taking the Government's review on board.
"We don't think it is enough. We do think fees are high given the assets under management have grown."
There are 2.8 million people in KiwiSaver with more than $45 billion invested.
The default providers should be benefiting from economies of scale which should allow them to make cuts, Scott said.
"This is something the government needs to be looking harder at because we know fees can erode returns."
Kris Faafoi, Minister for Commerce and Consumer Affairs, said he was pleased to see both the ANZ and Kiwi Wealth drop their fees and hoped it would put pressure on other providers to also look at their fee structures.
"I have been very clear that we want to see strong competition between KiwiSaver providers and fees going down, Faafoi said.
"The cumulative effect of fees and returns can make a big difference to how effective the funds are at providing for peoples' retirement."
The review of fees comes ahead of the Government's seven yearly review as to which providers get default status.
Gaining the status means they are allocated members who join KiwiSaver through auto-enrolment when they start or switch jobs.
Initially, there were six default providers but this was expanded to nine in 2014 at the first review.
Faafoi said the Government would begin its next review next year, and fees would be a significant factor in the tendering and appointment process.
"Bottom line, we want people to get the best outcomes for their KiwiSaver money – all New Zealanders should have confidence that their funds are doing this."
Faafoi said while KiwiSaver was generally working well, he was keen to see increased transparency.
"We need to make it as easy as possible for New Zealanders to engage with their KiwiSaver accounts and make active decisions about the funds that they are invested in and the amounts that they are contributing."
Fees have increasingly come under the spotlight in recent years with the entry of low-cost provider Simplicity amid growing balances.
In 2016 Kiwis paid $325.9 million in fees to their providers - an average of $125 for every man, woman and child signed up to the retirement savings scheme.
This year also marks the start of providers having to tell their members how much they are being charged in fees in a dollar form.
That is due to start around April when annual member statements come out.
Last year the Financial Markets Authority launched a tracker tool to enable people to see how much of their money was going on fees.
The Commission for Financial Capability also runs a fund comparison tool on its sorted website which allows people to compare the fees, services and returns for funds.