After long-running negotiations with the Financial Markets Authority (FMA) both Kiwibank and ASB are finally set to kill their respective zombie KiwiSaver schemes.
ASB's FirstChoice and the AMP-managed Kiwibank KiwiSaver closed to new members almost two years ago but have remained in limbo ever since.
Both ASB and Kiwibank were seeking FMA approval to merge the shuttered schemes holus-bolus with their main KiwiSaver offerings before issuing official wind-up papers.
However, under the KiwiSaver legislation, full-scale transfers can only be approved if the schemes are broadly similar (for example, in investment choice and fees), which neither ASB nor Kiwibank were able to show.
Following years of haggling, the FMA has reached a compromise deal with both providers, which will result in a split transfer process. The agreement will allow ASB and Kiwibank to transfer members from the closing products to their other schemes if a like-for-like investment choice is available. Where no similar investment option exists, members will either elect to transfer to a new scheme or will be allocated to a default provider.
In a letter sent to members this month, ASB says it plans to transfer members of the FirstChoice NZ Cash, Conservative, Moderate, Balanced and Growth funds to the main bank scheme.
"For members invested (either partially or entirely) in funds that are considered to have no equivalent investment option in the ASB KiwiSaver Scheme (Active Conservative Fund, Active Balanced Fund, Active Growth Fund, Active High Growth Fund, and the Global Sustainability Fund), these members will not be part of the proposed transfer to the ASB KiwiSaver Scheme," the member letter says.
Kiwibank is due to issue a similar letter to members of its AMP-managed scheme, setting out the terms for transferring into the Kiwi Wealth KiwiSaver (formerly the Gareth Morgan scheme).
As at March 31 this year, the Kiwibank KiwiSaver scheme managed almost $200 million for about 20,000 members. According to the most recent FirstChoice annual report, the scheme managed $221 million for just over 14,000 members.
It is understood about 50 per cent of members will be automatically transferred to the respective ASB and Kiwibank schemes once the deal is finalised.
Meanwhile, the merger of the Fidelity KiwiSaver with Grosvenor is also expected to be complete before year's end.