The soon-to-be-reformed Ministry of Economic Development (MED) has already published its terms of reference for the default provider review, which doesn't look like a rubber-stamping exercise for the status quo.
According to the MED, the review will attack three basic questions:
• How have existing default arrangements performed from operational, administrative, regulatory and policy effectiveness perspectives?
• What should be the objectives for the default provider arrangements and what are the best institutional arrangements and investment settings to deliver these objectives?
• What is the optimal process for managing any transitions from existing arrangements?
A discussion document is due out soon with final decisions to be announced before the end of the year.
The new quarterly disclosure requirements, meanwhile, are due to kick in by April 1, 2013.
All retail KiwiSaver schemes will have to supply a templated quarterly report covering "returns, fees, assets and conflicts of interest". This should bring a welcome dose of transparency and comparability to the existing idiosyncratic mish-mash.
In a non-Budget item, the Financial Markets Authority (FMA), which regulates the KiwiSaver Sector, also tweaked the rules last week, publishing a guidance note on performance fees.
While only two existing KiwiSaver providers, Fisher Funds and Milford (the now-defunct Huljich scheme also indulged in the practice), currently charge direct performance fees the issue deserved greater clarity. Read the industry submissions to enjoy the full debate but the upshot was providers now have to justify and explain their performance fees to a much greater degree.
Just prior to the FMA announcement, Fisher Funds raised the benchmark performance fee for its growth fund to 'the official cash rate plus 5 per cent', substantially up from the previous measure of the 90-day bank bill rate - enough, perhaps, to keep the actuary happy.