When Michael Cullen, then New Zealand's Finance Minister, announced the creation of KiwiSaver in 2005, it promised to change the way we save and invest our money.

It offered a partial solution to the problem of paying for the retirement of an ageing population and a way for Kiwis to diversify their property-heavy investments without needing to be stockmarket experts.

The scheme began on July 1, 2007. Helped with the juicy incentive of a $1000 kick-start, and automatic enrolment for new employees, it quickly amassed a large number of members. By last month, more than 2.6 million Kiwis had joined KiwiSaver - more than a million enrolled automatically.

A great success then, in terms of numbers. But how much do we really know about how and where our money is invested? Not enough, developments in the past two months suggest.


A Herald investigation found KiwiSaver providers had made $153m of investments in companies blacklisted for ethical reasons by the government-run NZ Superannuation Fund.

They included armaments firms involved in making cluster bombs, landmines and nuclear weapons and firms making tobacco or guilty of human rights abuses. To their credit, providers have since acted to unwind most of these investments - but only after they came to light in media reports.

This week, thanks to another Herald report, we discover most KiwiSaver providers don't give customers the full dollar amount for fees charged to manage their money.

The ease of enrolling in the scheme - a strength in terms of gaining members - is also a weakness.

Many of those enrolled automatically are put into a provider's default, conservative scheme. If a young saver, for example, doesn't change their investment profile to one reflecting a long working life with the ability to ride out the ups and downs of a more growth-focused fund, they could miss out on tens of thousands of dollars in potential gains.

Part of the responsibility, of course, falls on the investor. But even if they do actively manage their fund, the choice in how KiwiSaver money is invested is usually limited to changing the mix of conservative, balanced and growth investments.

What isn't easily accessible is a full list of which companies and assets are being invested in.

Such a list would encourage Kiwi investors to take more interest in the performance and activities of the firms they're putting their money into.

Yes, switched-on investors can find out these details but it's not enough to mention the investments in the fine print of a disclosure statement - they need to be prominently displayed and clearly understandable. We should be able to follow the companies we invest in the way we do our favourite sports teams.

This knowledge could spark the courage among ordinary Kiwis to consider forms of investment other than the family home - a good result for the individual and our capital markets.

Investors deserve transparency. We need to know where our money is invested and exactly how much it's costing us. As the controversy over weapons investments shows, there's more than just the comfort of our retirement at stake.