Meeting to tackle KiwiSaver delays

Ongoing problems with the transfer of KiwiSaver accounts has forced fund managers to ramp up their bid to resolve the issue.

Providers are to meet in Auckland tomorrow to try to solve delays which have pushed transfers beyond the 35 working day maximum.

The problem was first broached at a meeting in November and soon after KiwiSaver watchdog and Government Actuary David Benison sent letters to providers warning them to "get their act together".

But four months later providers say there are still problems with getting accounts moved from one company to another.

ING head of distribution David Boyle said transfer delays were the "biggest challenge" facing providers at the moment.

"Most providers have always been really good - it's just one or two in particular who are not playing by the rules," he said.

Boyle would not name the perpetrators but said the providers had been warned and given until the end of February to sort out their back office systems.

Benison told providers in December they could face an investigation or possible shut-down of the scheme under the KiwiSaver Act if any were found to be purposely using delaying tactics to pressure savers into staying with them.

Competition in the transfer market began heating up last year after new sign-ups to the Government's retirement savings scheme slowed in the wake of the recession.

Vance Arkinstall, chief executive of the Investment Savings and Insurance Association, one of the meeting hosts, said he hoped getting together would help clarify how widespread the problem was.

"What we need to be clear on is how big is the transfer issue. I don't think it is a widespread issue."

Fingers have been pointed at one particular provider but others believe it is more than one causing delays.

Arkinstall said he was trying to encourage all providers to have a responsibility towards their members.

The meeting will also aim to thrash out concerns over people gaming the market with financial hardship claims by switching providers.

People can only make claims for serious hardship for specific reasons such as not having enough money to live off, to pay the mortgage for the house they live in or if they or a family member become seriously ill or die.

But while the rules are set down under the act it is up to the individual trustees of the KiwiSaver fund to make the final call on the claim.

New Zealand Guardian Trust general manager of corporate trustees Bryan Connor believed one solution would be to have one central party, like the Inland Revenue, make the decision for all cases.

But Arkinstall said it would be premature to shift the management to a central body.

"For trustees to be taking that view - that's a cop-out."

He said the hardship provision was just one of the issues trustees had to deal with under the trust deed.