The contracts for the nine KiwiSaver providers with an immediate customer pipeline end in 2021 and the government wants your view on what you want to happen next.
The Treasury and Ministry of Business, Innovation and Employment are taking submissions until Wednesday, and if you're intimidated by a dry discussion document, there's also a simpler consumer survey asking the same questions.
Essentially, they want to know what they can do to make the default funds better. As Commerce Minister Kris Faafoi recently put it: "The bottom line is that we want to ensure that KiwiSaver, including default fund members, get good value-for-money."
The funds were initially seen as a parking space where members would idle until they did their due diligence and chose on where to invest.
However, that hasn't quite panned out. About 285,000 people are in default funds by choice and another 430,000 by inertia. They make up about a quarter of all 2.9 million KiwiSavers. Rewind five years when the contracts were last reviewed and there were 780,000 members in default funds out of 2.1 million KiwiSavers.
So officials now want to figure out how the conservative funds can make a meaningful contribution to someone's retirement.
The paper is leading submitters to a life-stages approach, where people cycle through growth, balanced, and conservative assets as they get older. The idea being that they can reap better returns from riskier investments at a younger age, but as they get older they're more about capital protection.
That was what the big fund managers were pushing for five years ago in the last review – something the previous administration rejected, adhering to the view that they were just a temporary measure.
Brian Gaynor: NZX brokers have raised white flag of surrender
Supercharging the markets: New push to pump money into companies
This time around, the consultation coincided with an industry-led review into the wider capital markets chaired by former investment banker Martin Stearne.
That report has a lot to say about KiwiSaver and the committee will make its views known to the government. Among them is a recommendation to ditch the contracts for default providers altogether and instead replace them with default funds which any firm can offer.
That should stoke competition and in theory encourage more personal contact with new members. And if members don't shift after three years, "all future contributions could be directed to a balanced fund (assuming default funds retain their conservative setting)," the report said.
Last year a group of financial advisers were agitating for the default providers to be dropped altogether in favour of a state-run scheme, something NZ First MP Fletcher Tabuteau was pushing for.
That's not the first time a government scheme has been floated. The Kerry McDonald-led Savings Working Group report was a fan back in 2011, in part because it saw that as an option to lower fees. It also viewed the single scheme as then being able to offer a limited and simple range of investment mixes relative to a member's age.
The tension is for the government is that a changing the investment mandate and adding ethical investment criteria could push up fees. That's a problem because keeping fees cheap is one of the few levers the government can control.
And it's an ongoing bugbear for officials frustrated that fees haven't come down as expected.
The latest Morningstar report shows the median annual member fee for default funds has come down to $27.14 from $31.40 five years ago, but the total fund charge has been flat at 0.52 per cent. That's meant the providers have pocketed more from default members at both an aggregate and per member level.
Officials seem comfortable if higher fees were accompanied by higher returns as could be expected from a different investment mandate.
However, as one fund manager pointed out, it's easy to see some problems with pushing people into index-tracking growth funds at a time when stock markets are being super-charged by ultra-low interest rates and passive investment funds are seen as being on track to overtake actively managed entities within the next two years.
Surprisingly, the paper is largely silent on how to bring the nation's missing million into the KiwiSaver fold – those people for whatever reason haven't signed up to the scheme.
Consumer NZ head of research Jessica Wilson said a lingering problem for members is inconsistent reporting.
With more than 200 schemes available, it's hard for the layperson to wrap their head around the various options, what the fees are, or how the fund is tracking against its benchmark, let alone dig into the underlying assets.
Wilson said better disclosure to let people more readily compare schemes and bolstering consumer protections should remove barriers to people joining KiwiSaver.
She wants to see the default providers offer better customer service given they don't have to pay to acquire new customers.
Given the performance of some over the past decade, that's the least they could do.