David Chaplin 's Opinion

A personal finance columnist for the NZ Herald

Inside Money: KiwiSaver default review news coming

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Photo / Hawke's Bay Today
Photo / Hawke's Bay Today

There's quite a lot hinging on the outcome of the default KiwiSaver regime review such as the commercial plans of many providers and the investment plans of about 400,000 New Zealanders.

The government review is considering a number of fundamental changes to the present system including expanding/reducing the number of default schemes and shifting the mandated one-size-fits-all conservative default investment strategy to an age-based (or 'life-cycle') approach - cranking up the exposure to riskier assets for the younger KiwiSaver members and slowly dialling it down over the years as they crawl toward retirement.

In a burst of optimism, the Ministry of Business Innovation and Employment (MOBIE) originally penned in March this year for the final KiwiSaver default decision. But until I lodged an Official Information Act (OIA) query, MOBIE wasn't keen to tell me why the review was six months overdue, or anything else about the process.

After receiving the OIA response this week I can now reveal that the "... the review was complex and took longer than expected", which is definitely official information.

Unofficially, I understand the review has also been held back by a number of key staff changes in MOBIE, requiring new officials to be briefed on the default complexities before reviewing could resume.

Despite the hold-ups, in its OIA response did confirm that "the government has made some decisions relating to the KiwiSaver default regime" while it is also "finalising a number of [other] matters".

Non-official channels indicate that the final decisions will shake up the current default KiwiSaver settings, probably introducing 'life-cycle' into the mix.

The KiwiSaver industry, more than individuals perhaps (especially default members who, almost by definition, are uninterested in the process), has been hanging out for an answer to these questions.

According to MOBIE, the wait is just about over:

"Ministers will decide on the timing of these announcements but at this stage they are expected in the next month," the OIA says, "or so."

David Chaplin

A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. David has edited magazines and websites for the financial advice, investment and superannuation industries. Today, he contributes to various publications in Australia as well as his bi-weekly blog for the NZ Herald under the 'Inside Money' banner.

Read more by David Chaplin

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