Inside Money: Another KiwiSaver scheme bows out of the game

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In a game of increasingly high stakes another KiwiSaver scheme has folded its hand.

The Aonsaver AMT (the AMT bit stands for Aon Master Trust), an entity that continues to operate) officially threw in its cards last May, although the news has yet to be communicated widely.

Not to be confused with the Aonsaver scheme (now known as the Aon KiwiSaver), the Aonsaver AMT, which had accumulated about $13.5 million prior to closure, was targeted at employer groups rather than individual investors.

The closure of the Aonsaver AMT is probably indicative of the fact most employers have opted-out of the KiwiSaver process. Under the terms of the KiwiSaver legislation, employers can select a preferred scheme for their employees that then functions as the 'default' option for the workforce in question.

In principle this sounds like a good idea but not many employers have been willing to get involved in KiwiSaver indeed, many have used it as an excuse to close existing, perhaps more generous, company superannuation schemes.

According to the latest IRD statistics, almost 260,000 KiwiSaver members - or about 12 per cent of the total membership - have joined schemes via employers.

While the figures indicate the employer market isn't a total washout for KiwiSaver firms, the fact that Aon, a massive global insurance and retirement benefits group, couldn't get the Aonsaver AMT up to scale shows it's a pretty tough business to crack.

A similar business to Aon, Mercer, has also struggled to get its employer-based scheme, the Mercer Super Trust KiwiSaver, under steam. The Mercer Super Trust KiwiSaver (not to be confused with the Mercer Super Trust or the Mercer default KiwiSaver scheme) has just over 6,600 members and almost $100 million under management.

At its peak the Aonsaver AMT had signed 1,750 members, a number that had halved by the time it closed. The decision to close may also have been fast-tracked by the exit of the AonSaver AMT's biggest client, financial advisory firm Plan B (now owned by listed Australian financial services firm IOOF), which arranged to transfer its KiwiSaver funds to rival scheme Fidelity (now owned by Grosvenor).

According to the final Aonsaver AMT accounts, Plan B had about $6 million in the scheme.

Aside from managing its remaining KiwiSaver scheme (boasting almost 20,000 members), Aon also provides administration services to a host of other schemes.