There can be only 10, according to a ministerial statement published this October, but it is understood 11 KiwiSaver providers have applied for default status under a now-closed government tender.
Assuming the government sticks to its 10 limit (the Cabinet papers allow some flexibility here) at least one provider, then, will have its default dream dashed.
I suspect the government will probably reject more than one application - just to keep the industry on its toes, perhaps - but the winners should be revealed by April next year.
In the meantime I have compiled a list of likely candidates based around the core criteria for default selection:
* the scheme must be a Portfolio Investment Entity (PIE);
* the provider has to offer at least conservative, balanced and growth investment options;
* restricted schemes (ie only open to a certain, narrowly-defined membership base) won't be considered;
* the scheme must demonstrate it is able to accept default members beginning July 1 next year;
* the provider needs to be managing at least $100 million of KiwiSaver funds already.
We can take it for granted that the existing five default providers have applied for reappointment, which leaves only seven other non-restricted schemes that might comply with the $100 million minimum.
Starting with the five existing default providers, here's my speculative list of the 11 contenders:
* OnePath (ANZ)
* Tower (Fisher)
* KiwiBank (Gareth Morgan KiwiSaver)
* Aon KiwiSaver
It is understood the one other scheme that meets the default entry-level criteria, Milford Asset Management, has not applied for the privilege.
While the 11 schemes listed above might meet the basic default standards, they will also have to comply with a new member education requirement inserted by the government.
How the potential default providers plan to deliver the member education standards will be a crucial factor in any appointment decision. According to an industry source who has seen the tender document, the government has left it pretty much up to the providers to fill this section in without requiring too much in the way of proof - although presumably they will be held to account for any promises made here.
And, much to the relief of the applicants, the government has apparently clarified that the requirement to provide KiwiSaver default members with access to "impartial financial advice" does not extend to considering the merits of competitor products.
With 11 applicants vying for 10 spots, default status clearly remains attractive to many providers despite the addition of the education/advice complexity and the somewhat unstable nature of default membership.
Most providers probably view default funds as a useful holding pen before shunting members into other of their more differentiated KiwiSaver products.
Interestingly, the ANZ-owned default option, the OnePath KiwiSaver Scheme, recently restricted entry to individuals allocated via the IRD 'carousel' system.
"It is not possible to join the OnePath KiwiSaver Scheme in any other way and, in particular, you can't apply to join the OnePath KiwiSaver Scheme," the ANZ/OnePath website says, indicating the bank is keen to isolate non-engaged members before applying special treatment.