KiwiSaver: Keep a long-term focus

CANSTAR researches 138 KiwiSaver investment options across 20 KiwiSaver schemes to determine which funds are offering outstanding value for investors.
  • CANSTAR rates 138 investment options across 20 KiwiSaver schemes
  • Awards 10 investment options across 6 providers a 5-star rating for Outstanding Value
  • Aggressive, Growth, Balanced, Conservative & Defensive profiles considered

The number of New Zealanders with an active KiwiSaver account continues to grow, with approximately 2.64 million active/provisional members at June this year, entrusting Funds with tens of billions of dollars in investment savings. As individual account balances grow, research and ratings organisation CANSTAR reminds investors to pay attention to their asset mix, the fees they are paying and the return they receive.

“It’s heartening to see that around half of all KiwiSaver members have actively chosen their KiwiSaver provider, which shows a real interest in their retirement savings,” said CANSTAR General Manager – New Zealand, Jose George.

“As New Zealand’s KiwiSaver system matures we are seeing a wealth of investment options, product features, online educational tools and of course competitive performance and fees.  The government, via the Financial Markets Authority, seems to have struck a good balance between regulation and market competition and that balance is translating into value for consumers.”

Fees worth more than a glance

Performance and fees are the two most significant drivers of KiwiSaver account growth, but while fund performance may fluctuate from year to year, the fees charged on a KiwiSaver fund are a constant.

“The good news for investors is that average KiwiSaver fees have barely moved over the past two years,” said Mr George. “Looking at management fees, administration fees, expense fees, trustee fees and annual member fees, CANSTAR has calculated that for a KiwiSaver member with an account balance of $11,500 in a balanced fund, average annual fees would be approximately $154. In 2014 the equivalent cost was $150.”

Table 1: Total Annual Cost Comparison by Year

Total Annual Cost
Profile 2014 2016
Defensive 106.11 111.14
Conservative 124.67 120.92
Balanced 149.93 153.61
Growth 161.50 169.14
Average Balance of $11,500 considered. The total annual cost considers the management fee, administration fee, expense fee, trustee fee and annual member fee. Information collected during July period of each year. Source: www.canstar.co.nz

“The average cost, though, does hide significant differences in the level of fees charged between products,” said Mr George. “All other things being equal, those differences can eat into your retirement savings over time.”

Out of the KiwiSaver schemes assessed in CANSTAR’s 2016 KiwiSaver star ratings report, the following minimum, maximum and average annual fees based on an account balance of $11,500 have been calculated:

Fund Type Minimum ($) Average ($) Maximum ($)
Defensive 55.84 111.14 183.87
Conservative 65.91 120.92 181.58
Balanced 98.78 153.61 236.43
Growth 107.51 169.14 218.26
Aggressive 113.24 167.25 240.03
Average Balance of $11,500 considered. The total annual cost considers the management fee, administration fee, expense fee, trustee fee and annual member fee. Information collected during July period of each year. Source: www.canstar.co.nz

Which KiwiSaver providers offer outstanding value?Canstar KiwiSaver

CANSTAR has compared 138 investment options across 20 KiwiSaver schemes rated across five different profiles – Defensive, Conservative, Balanced, Growth and Aggressive. Each eligible KiwiSaver fund reviewed for the CANSTAR KiwiSaver Star Ratings is awarded points for its comparative pricing, historical investment return performance and for the array of positive features attached to the product.

Across the 138 investment options assessed, 10 have been found to offer outstanding value and have achieved a five-star rating. These products are:

Defensive

  • ASB KiwiSaver Scheme – NZ Cash Fund
  • Superlife – NZ Bonds Pool

Conservative

  • ANZ Default KiwiSaver Scheme – Conservative Fund

Balanced

  • ASB KiwiSaver Scheme – Balanced Fund
  • Superlife – Ethica Pool

Growth

  • ASB KiwiSaver Scheme – Growth Fund
  • Superlife – SuperLife60 Pool

Aggressive

  • Kiwi Wealth KiwiSaver Scheme – Growth Fund
  • OneAnswer KiwiSaver Scheme – Australasian Property Fund

Across the providers, Mr George singled ASB and Superlife, which achieved three five-star ratings, out for special mention.

“As workers get closer to retirement their appetite for investment risk may often change,” he said.

“ASB and Superlife have the distinction of being the only providers to receive a CANSTAR five-star rating across a range of different investment profiles; ASB and Superlife have been awarded outstanding value for their defensive, balanced and growth investment options, which is a very impressive achievement.”

ASB General Manager Wealth Jonathan Beale says ASB is delighted to be recognised by CANSTAR as a KiwiSaver provider offering outstanding value.

“ASB has been focussed on providing cost-effective KiwiSaver solutions since KiwiSaver was launched in 2007. We are thrilled to achieve a five-star rating across the defensive, balanced and growth investment options,” Mr Beale says.

This is the sixth year ASB KiwiSaver Scheme’s Balanced and Growth Funds have maintained CANSTAR’s highest ‘outstanding value’ award.

“We believe this consistency as a market-leader represents our long-term focus, and commitment to improving the future financial wellness of our members,” Mr Beale says.

Consumers can download the KiwiSaver Star Ratings report at www.canstar.co.nz  or by clicking here

ENDS

 

For further information, contact:

Brenda Newth, SenateSHJ +021 655 534

About CANSTAR:
CANSTAR provides Australia and New Zealand’s only fully interactive online research service in retail and business finance.
Founded in 1992, CANSTAR Pty Limited (formerly CANNEX) is Australia and New Zealand’s premier researcher of retail finance information for over 250 institutions such as Banks, Building Societies, Credit Unions, Finance Companies, Brokers, Mortgage Originators, Life Companies and finance related Internet Portals.
CANSTAR customers use the extensive database for competitor analysis as well as a means of disseminating their product range.   CANSTAR also distributes this information to print and electronic media for publication and to Agents, Accountants, Brokers and Internet Portals for use in advising their clients.
What are the CANSTAR star ratings?
CANSTAR researches, compares and rates the suite of banking products listed below. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories.  Please access the CANSTAR website at www.canstar.co.nz if you would like to view the latest star ratings reports of interest.
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·          Business deposits
·          Cash PIE
·          Credit cards
·          Credit card rewards
·          Home loans
·          KiwiSaver
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·          Personal loans
·          Savings accounts
·          Transaction accounts
·          Term deposits
COPYRIGHT
© CANSTAR New Zealand Limited (3225469), 2008-2013. The recipient must not reproduce or transmit to third parties the whole or any part of this work, whether attributed to CANSTAR  or not, unless with prior written permission from CANSTAR, which if provided, may be provided on conditions.
DISCLAIMER
To the extent that any CANSTAR data, ratings or commentary constitutes general advice, this advice has been prepared by CANSTAR New Zealand Limited (3225469) FSP 200146 and does not take into account your individual investment objectives, financial circumstances or needs.  Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such.  CANSTAR recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser.  A Product Disclosure Statement relating to the product should also be obtained and considered before making any decision about whether to acquire the product. CANSTAR acknowledges that past performance is not a reliable indicator of future performance.

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