BNZ's imminent KiwiSaver scheme will no doubt reach critical mass quickly enough. Meanwhile, the New Zealand Association of Credit Unions (NZACU) couldn't get its KiwiSaver scheme up to scale in five years of operation.
While incoming regulations accelerated the NZACU's decision to wind up its scheme, the outcome was probably inevitable anyway. With 4,200 members and $30 million under management, the NZACU scheme wasn't big enough to justify the overheads.
Hooking up with Fisher Funds to market its KiwiSaver product will remove the costs and most of the responsibility from the NZACU. But the credit union group is giving up some control in exchange - as a mere distributor it will have no say in the underlying investment strategy of the scheme, for instance.
Henry Lynch, NZACU chief, is unfazed.
Lynch said the Fisher offer would be cheaper than its current scheme, which is outsourced to Mercer, while serving up the existing standard conservative, balanced and growth investment options.
As well, he said Fisher would not be granted unrestricted marketing access to NZACU members.
The existing 4,200 members will be sent transfer packs explaining the deal.
Any new members the NZACU recruits to Fisher would earn the group $50 for employed members, $30 for self-employed and $10 for those members aged under 18. As well, the group would retain a small ongoing stake in the scheme with 0.1 per cent of funds under management payable to the NZACU annually - that's about $30,000 based on the current total.
All up, it's unlikely the NZACU would recoup its KiwiSaver set-up costs but it has limited future losses.
Lynch said with 170,000 credit union members nationwide there remained plenty of untapped KiwiSaver potential. To make the most of that potential, however, the credit unions may have to adopt a bank-like attitude and cross-sell like crazy.