Scheme challenges KiwiSaver industry to keep costs low

Provider pledges but says it is a long way off for most

Scheme challenges KiwiSaver industry to keep costs low

KiwiSaver providers are being challenged to keep fees low and help New Zealanders save billions in fees in the process.

The JUNO KiwiSaver Scheme has issued its 24/7 Pledge, which is both a promise and a challenge to the rest of the KiwiSaver industry. From now until 2030, and beyond, JUNO pledges to keep its fees low and easy to understand; keep helping our members understand how their retirement goals are threatened by paying high fees over long periods; stay focused on providing great service and returns for members, in return for their fees; and be a voice on KiwiSaver fees in the industry, including for the upcoming government review of KiwiSaver default providers.

“We also publicly challenge other KiwiSaver providers to do the same,” to JUNO chief executive officer and founder Mike Taylor said. “The ultimate goal is that all Kiwis benefit from lower fees by 2030 regardless of whether they are with JUNO or another provider.”

JUNO’s move follows the projections by the Treasury, that current KiwiSaver funds under management at $50 billion are on track to have four times that figure by 2030.

“That’s encouraging,” Taylor said. “But by the time we get there, members will have paid a massive $13 billion in fees. That’s $25 million a week on average, and it’s unacceptable.

“So many New Zealanders already struggle to pay rent, mortgages, taxes and school fees – we think it’s high time other KiwiSaver providers dropped their fees and allowed Kiwis to enjoy more of their own hard-earned money when they retire,” he noted.

Read more: Customer satisfaction with KiwiSaver providers declines

JUNO claims halving the average fee from 1.2% to 0.60% would halve the amount lost in fees to $7 billion and push the total KiwiSaver balance in 2030 up by an extra $24 billion.

Taylor mentioned the Commission for Financial Capability’s (CFC) review of retirement income policies, as well as decisions from the Ministry of Business, Innovation and Employment (MBIE) and the Minister of Commerce about who will be able to be a default KiwiSaver provider.

“That process should, among other things, establish a fee standard from which all other KiwiSaver funds will be priced,” Taylor noted.

“We’ve pledged to help Kiwis make good decisions about how to invest for their retirement, which is a long way off for most. Part of that is returns, but part will be minimising as far as possible the costs of their investment,” he added.

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