Mike Hosking: You're responsible for your KiwiSaver money, not the banks

If default funds are no good, let the money's owner do the spade work and fix it.

A bunch of number people have launched a series of ideas or changes, you could even call it a campaign, to do something about default funds in KiwiSaver.

This, apparently, came out of what they see as the Government's weak response to the Australian banking situation and Commission of Inquiry.

I assume their thinking is, the banks who have been laid so bare and so embarrassingly so in Australia, in some cases are the owners of the banks here.
And if they're dodgy over there, they must be shonky here.

Adrian Orr, the new Reserve Bank Governor, spoke out early on this and said there was nothing to see, an inquiry was a waste of time. The politicians agreed. The Financial Markets Authority made a few noises about proving it, the banks apparently did and that was that.

And fair enough too, as I said at the time, we run the risk of finding ourselves on a very slippery slope if we are going to reverse basic justice and just go around pointing fingers based on activities in foreign jurisdictions.

Anyway, out of all that came this theory that the default funds of KiwiSaver, of which 400,000 of us are in, has seen us miss out on about a billion dollars in returns.

Their argument is the default funds are often deposited in those very banks they were so worried about - and therefore the return has not been flash.

So in other words, you don't choose where to put your money, the bank who runs the fund goes, 'Oh well where shall i put it?'

And they go, 'I know, I'll stick it in my vault and take the benefits.'

Now missing in this implied criticism of the banks is the very simple question: why is a person in a default fund in the first place?

And if they are, how much of that circumstance and return, or lack of return, can be laid directly at their doorstep instead of trying to blame a third party - ie the banks.

You are in a default fund because, in simple terms, you couldn't be bothered doing anything about your savings.

You decided to join KiwiSaver, but then didn't do anything more like ask, 'Where should I put my money? Who can advise me of this? What are the risks I am taking? What sort of return should I reasonably be looking for? Who can provide that sort of return?'

And if you couldn't be bothered asking any of that, can we not conclude that one, it's your fault or two, you might be perfectly happy having someone else do all the work for you?

And whatever your default comes up with is fine with you?

Do remember a default fund is not a rip off or a scandal, it's just a nominated safe place the money goes so that it's not lost in an emerging market or bitcoin scandal.

Can we really blame the KiwiSaver provider whether it's a bank or not? Especially if the person who owns the money can't be bothered asking a few questions or making a few decisions.

The ultimate irony, of course, being, if the providers had stuck the money in high risk and it had all vanished, who would be getting the blame?
Exactly.

The idea, from the numbers people, although laudable falls into the classic modern age thought process - blame anyone but the person who should be carrying the blame.

If default funds are no good, let the money's owner do the spade work and fix it.