Commerce Minister Craig Foss has this week released a discussion document relating to a review of KiwiSaver default provider arrangements.  Default provider arrangements apply to those employees who are automatically enrolled but do not select a KiwiSaver provider.  The current default provider arrangements will expire on 30 June 2014. 

The Ministry of Business, Innovation & Employment is consulting on whether these existing arrangements remain appropriate based on experiences with the scheme, existing recommendations for change, and international experience. 

The Discussion Document does not provide a preferred position.  Instead, it seeks input from relevant stakeholders and consumer groups.  The Discussion Document seeks input on:

  • The objectives of the default fund and questions such as why the default product exists, evidence from investor behaviour, and risk and return trade-offs.
  • The investment approach of the default fund including matters such as life-cycling, first home withdrawal and passive versus active management.
  • The role of fund size, scale and fees on final accumulation balances (including institutional architecture such as how many default providers should exist).
  • Other issues such as financial literacy initiatives and the potential transition process.  

The Discussion Document can be accessed here.  Submissions are due on 24 December 2012.