David Chaplin: How the FMA can open up KiwiSaver

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In modern high-school terminology seven of the eight KiwiSaver providers recently scored by research house Morningstar would have been awarded grades of 'achieved' or 'approaching achieved'.

I think that means they passed, with the exception of AMP KiwiSaver, which Morningstar labeled as 'under review' (known as 'incomplete' to today's high-schoolers or 'fail' to old-schoolers).

The full Morningstar research remains proprietary (ie you have to pay for it) but the published synopsis, not yet available on its website, has this to say about AMP KiwiSaver: "Morningstar has yet to gain a complete understanding of the transition to a combined AMP/AXA offering. The underlying direct property exposure further complicates the move."

It appears Morningstar is still waiting for further disclosure from AMP about what's happening to all that money (over $1.1 billion as at September 30, according to Workplace Savings NZ figures).

AMP doesn't have to tell Morningstar anything, of course, which illustrates the limits of voluntary disclosure to private researchers in improving the transparency of KiwiSaver - especially if it isn't freely available to the public.

In a recent New Zealand Herald column, Brian Gaynor, head of fund manager and KiwiSaver provider Milford Asset Management, argued for greater transparency across all schemes.

"KiwiSaver will not achieve its full potential until a highly regarded website is established that contains accurate information on fees, asset allocation and the post-tax performance of all registered KiwiSaver schemes," Gaynor wrote.

My own ongoing research project has contributed something towards this goal but a full disclosure regime as envisaged by Gaynor requires government grunt.

The obvious candidate to build the information centre would be the Financial Markets Authority (FMA), which regulates the KiwiSaver sector, plus, perhaps, a little help from it friends in the Inland Revenue Department.

The Australian Prudential Regulation Authority (APRA) provides a good starting model with the superannuation fund level data it began publishing last year. APRA's figures show most of the metrics Gaynor mentioned for the top 200 of Australia's super funds, representing almost 99 per cent of all the super assets it regulates.

In its 2008 consultation document proposing the new disclosure regime, the Australian regulator concluded: "APRA expects that this new publication will generate worthwhile improvements to disclosure about fund level performance in the superannuation industry, at near zero cost."

So, hey, how about it FMA, a zero-budget item for the 2012 qualitative improvement sub-committee to consider?