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.