Sir Michael Cullen has called for the Government to take a heavier approach to the way it regulates KiwiSaver fees.

Cullen, who was Labour's finance minister when KiwiSaver was launched in 2007, was talking about the potential impact of a capital gains tax on KiwiSaver on the AM Show this morning when he raised the fee issue.

Cullen said the Tax Working Group was looking at ways to offset any potential impact from a capital gains tax on things like KiwiSaver.

"We don't want to end up with a reduction on returns to low to middle income earners in KiwiSaver."

Advertisement

He said one of the best ways of doing that was to crack down on KiwiSaver fees.

"One of the best ways of doing that of course, and I urge Grant [Finance Minister Grant Robertson] to get to this...is to look at much heavier regulation of the fees charged on KiwiSaver schemes."

Cullen said default schemes and tracking funds had "no excuse" for charging more than about 50 basis points for just "clipping the ticket".

"They are charging a lot more than that and that comes off the net return substantially to people on modest incomes."

The Government has already signalled it will begin a review of the nine default providers next year and fees will be closely look at as part of that.

Robertson told a finance industry conference earlier this month that the default provider review, which takes place every seven years, was a chance to take stock of the market.

"To understand what obligations should be on providers and have a look at those big issues like fees, like ethical investment, because it is the right time to do it and to make sure we are part of enhancing KiwiSaver."