KEY POINTS:
A raft of new cash portfolio investment entities (PIEs) are expected to be launched over the next few months following reassurances from the Government that it will allow the new products.
The PIE regime went live in October and was designed to level the tax playing field for
investors between owning direct shares and investing in managed funds.
The change was timed to work in with KiwiSaver and all KiwiSaver funds are PIEs.
But the change also set the creative minds of the industry ticking and one side-effect was the cash PIE.
The funds act like a term deposit but allow taxpayers in the 39 per cent and 33 per cent tax brackets to pay a flat 30 per cent tax rate.
Rabobank was the first to emerge with a new product in December backed by fund manager AMP.
Since then Westpac, ANZ, and just last week Kiwibank have come out with their own PIEs.
Until recently many financial providers were hesitant to go ahead with the new cash PIEs because they had not received the official nod.
But Revenue Minister Peter Dunne told financial advisers at a conference last month that cash PIEs seem to be a logical move and he can't see the Government changing its view because they encourage saving and investment.
According to fund website FundSource, more than $600 million is invested in cash PIEs, a figure some are predicting will grow to $15 billion.
The term deposit industry is worth about $70 billion.
Mike Maunsell, chief executive of Appello Services - a technology support platform for PIEs which is 30 per cent owned by the NZX - says some providers are taking in $3 million a day in new money.
He expects most of the banks to launch PIEs and finance companies are also getting on the bandwagon.
But whether the money going to them is new investment remains to be seen.
LIEBERMAN LEAVES
ING'S chief executive Marc Lieberman is leaving the business to head up the European arm of a large US financial services firm.
Lieberman has been with ING for eight years and has headed the New Zealand division for two-and-a-half years. An American, he was previously with ING in Minnesota before moving to New Zealand.
But with the latest problems ING has faced over its troubled CDO (collateralised debt obligation) products, some might question whether Lieberman is running away from the business after such a short time in the top post.
He insists ING remains a great company both internationally and locally but the new job is an opportunity too good to pass up.
"It was a tough decision on my part."
Lieberman says he is leaving the business in good stead, particularly with KiwiSaver, where ING is thought to have the biggest share of those who have signed up.
The CDO problems are just a small part of the business, Lieberman says.
Lieberman finishes on July 31 and expects to start his new job within days of leaving.
ING hasn't named a successor yet but the new appointment is expected to come from within the Dutch financial services group.
FINDING YOUR BALANCE
Now that KiwiSaver seems to have got over its initial glitches many investors are keen to keep track of their contributions and account balances.
Bernie O'Brien, New Zealand head of Mercer, which works with Kiwibank to provide KiwiSaver funds, says there isn't a specific requirement for KiwiSaver providers to send out regular statements with updates on how much is going into the account and what the balance is.
But most of the KiwiSaver providers have an online service where you can apply for a password and login to check your balance.
Others also provide a phone service where you can get an account update.
O'Brien says it is typical for a paper statement to be sent out only once a year for these types of investment products.
Inland Revenue also provides an option where you can view your contributions online by registering for an information service called "Manage my KiwiSaver".
To use the service you first need to register for an IRD user ID and password.
However, employees should be aware that contributions shown on the online account may differ to that on payslips as employers only file payroll information with the IRD on a monthly basis and it takes time to process the information.
PROFITEERING
But not all KiwiSaver issues have been ironed out.
The Department of Labour is still investigating concerns about the potential for companies to profiteer on KiwiSaver by docking their employees pay while taking the tax credit from the Government.
The Herald first revealed concerns about this in April - a few weeks after the compulsory 1 per cent employer contribution kicked in on April 1.
At the time, Labour Minister Trevor Mallard said he had spoken to the chief executive of the offending company and been told the issue would be resolved.
Mallard then directed the department to take a closer look at the problem.
According to a spokesperson for Mallard the department is still looking into it but is expecting to complete investigations soon.
The issue comes as no surprise considering the Employers and Manufacturers Association had warned there would be confusion before April 1 as employers had not been given enough guidance on how to balance the KiwiSaver pay equity issue.
The Department of Labour received more than 300 calls within the first six weeks of the introduction of the compulsory contribution from people concerned about how to incorporate it into wage bargaining.
Businesses will be eagerly awaiting the outcome of Mallard's investigation.
