Finance Minister Grant Robertson says the Government's major KiwiSaver shakeup will apply "competitive pressure" to other private fund managers to slash their fees.
"I think and I hope that this will lead to a greater level of competition, and they will lead to a lowering of fees," he told media this morning.
He said that KiwiSaver fees have been too high for too long and the Government's move will help deliver a much-needed shakeup.
This morning, the Government revealed the nine current default KiwiSaver providers has been slashed to six.
Those are the newly appointed providers are Bank of New Zealand, Booster, BT Funds Management (Westpac), Kiwi Wealth, Simplicity and Smartshares (NZX).
That means that ASB, ANZ, AMP, Fisher Funds and Mercer will lose their current default provider status.
Commerce and Consumer Affairs Minister David Clark said the Government went to tender last October signalling the need for providers to demonstrate they would go further to deliver more for default members.
A major component of this was low fees.
"The six default providers were selected because they offer the best value for money for their members in terms of lower fees and higher levels of service."
Clark told media that for a long time, KiwiSaver fees have been "too high".
"We think they could have been better and that's proven to be the case in this competitive process," he said.
Robertson was singing a similar tune.
Asked if the moves would encourage all provides to bring fees down, Robertson said: "indeed".
"We do think this will apply some competitive pressure," he told media.
"I think it's something we can do as a government with the default scheme is actually put there to be a much more important part of how we make our decisions.
"I think and I hope that this will lead to a greater level of competition, and they will lead to a lowering of fees."
He said the move was a win for Kiwi Savers, as the Government has got on top of an issue that "we've all known was one that needed to be dealt with".