Inside Money: The unshiftables - stuck at home with default KiwiSavers

David Chaplin says that although an incredible 44 per cent of those enrolled in a Kiwisaver scheme have changed from their default, shifting the rest will be a challenge. Image: Thinkstock.

Tamsyn Parker has done a great job of illuminating the difficulties KiwiSaver providers have in shifting members out default funds.

A telling statistic from the story shows that Mercer, which gets most of its members via the default process, had "convinced just 850 people [out of the scheme's 85,000 members] to switch in the nine months from July 1 to March 31" - equating to a 1 per cent success rate.

From April a concerted campaign by the KiwiSaver provider has pushed a further 1,283 out of default status and into another, possibly more risk-appropriate, Mercer product: an over 50 per cent improvement in six weeks compared to the previous nine-month effort - quite impressive.

However, as the story explains, the numbers "do not include savers who have switched funds by moving to another provider".

And that's an interesting little comment, which deserves an asterisk and a footnote.

Because the aggregate KiwiSaver statistics, published by the IRD, show that a large proportion of auto-enrolled members have made an active choice since first being shunted into a default fund.

According to the IRD stats, from the 2007 launch of KiwiSaver until the end of April this year 986,003 members have been automatically enrolled into a default scheme. But as at the end of April the IRD records only 556,061 members in default-allocated funds.

Based on mathematics, that shows almost 44 per cent of those originally defaulted into a KiwiSaver scheme have since made an active choice - an incredible statistic.

The IRD figures don't show whether auto-enrollees shift to a different fund offered by the original provider (probably not) or when they make the choice.

But perhaps the very act of auto-enrolment prompts some members to shift elsewhere, in the spirit of 'no one tells me what to do'.

The numbers also give a hint as to why providers struggle to move-on the rump default members.

With the easily-activated defaultees already shifted, what remains are the pathologically-disengaged, the conspiracy-theorists, the unsaveable, the right-at-homes and the GNFAs (gone-no-forwarding-addresses).