Many KiwiSaver customers are about to see the fees they pay their fund managers in dollar figures for the first time, and could be in for a shock, says the Commission for Financial Capability.
However, the commission said experts advise against bolting to a different provider with lower fees, or switching funds, unless you've done your research.
The change to dollar figures was a result of work by the commission (CFFC), the Ministry of Business, Innovation and Employment and the Financial Markets Authority (FMA) to improve the transparency of reporting for KiwiSaver members.
The requirement comes into effect from April 1, and savers will see the dollar figure on the next statement they receive sometime in the next two months. A customer with a balance of $10,000 in their KiwiSaver account may have seen the fund manager's fee expressed as 1.28 per cent, which would now be spelled out as $128 per year.
More than 2.7 million people belong to KiwiSaver with more than $45 billion invested.
Up until now, only some providers have stated the full dollar figure for fees charged with many giving a dollar figure for the annual fee and a percentage figure for other charges.
The commission said the KiwiSaver Fund Finder tool on the Sorted website showed total fees on $10,000 in a balanced fund range from $52 to $174 per year.
The commission's education group manager David Boyle cautioned savers against changing funds or providers solely because of the fee level.
"Some fund managers charge more, but you get a better return overall," Boyle said. "After using our online tools, the most important factor to take into account is the total return after fees."
When customers received their next statement it was a good time to review their KiwiSaver position, he said.
Savers should check they were contributing regularly, in the right fund for their stage in life and level of comfort with risk, getting the member tax credit, if eligible, of up to $521 a year from goverment and that their PIR tax rate was correct.
Liam Mason, director of regulation at the FMA, said: "This should be a good prompt to find out more about your KiwiSaver fund by using the online tools available and checking what you are paying for. The difference in fees may be due to the type of fund you are in – conservative funds tend to have lower fees than growth or aggressive funds – or it may be due to the fund manager providing a different range of services."
The FMA's KiwiSaver Tracker tool showed the percentage that fees took out of returns.
The CFFC and the FMA suggested customers concerned about how much they were paying in fees contact their provider and ask what services they were receiving, and how their money was being managed.
Sam Stubbs, chief executive at low-cost KiwiSaver provider Simplicity, in January said this year would be "a huge wake up for KiwiSaver members, who've been kept in the dark".
"When members finally understand what they're actually paying in fees this year, they could be shocked, he said.
"Many still assume they only pay an annual administration fee of $20-$30 because management fees (which are often higher) are not disclosed in a manner that people can understand."
Stubbs has calculated that New Zealanders were likely to pay more than $525 million in fees this year.
"KiwiSaver fees are the largest household expense people have never heard of," Stubbs said. "Over their lifetime, an average KiwiSaver member will pay $54,700 in fees, way more than they will spend on power or their mobile phones."
But Blair Vernon, managing director of KiwiSaver provider AMP Financial Services, speaking at the same time said fees were only one of a number of things that people should consider when choosing a KiwiSaver provider.
"Some low-fee offers, for example, offer only basic member services so it's a more do-it-yourself' approach to retirement saving, and we know that doesn't work for many people based on our experience of advising them for decades."
Vernon said people needed to focus on whether they had a coherent and realistic plan for their retirement and for what they wanted to achieve.
"KiwiSaver is just one part of that."