New Zealand’s KiwiSaver fees are trending down while returns for the year are mixed, according to new research from Canstar.
Canstar’s annual expert analysis, which is being released at a time of increased scrutiny for KiwiSaver, shows how fees have trended down across the market.
Canstar crunched the numbers for fees across KiwiSaver Growth, Balanced and Conservative funds with an average $20,000 balance*. Fees, based on Canstar’s scenario calculations and compared to the previous year, show Growth funds dropped an average 8% while on Balanced Funds they dropped 6%. Fees dropped just over 4% for Conservative funds.
Jose George, Canstar NZ General Manager, said KiwiSaver providers had responded to pressure around fees, for the benefit of New Zealanders. “The move toward lower fees is heartening to see – it shows providers are working hard to improve net returns over the long term for their members.
Compared to fees, the picture on investment returns is less clear, with Canstar’s research across the maximum, minimum and average returns on funds showing some good performances but others dragging down the average.
Average net returns on Growth funds dropped to 7.77% this year from 9.01% in 2018, while Balanced funds dropped to 6.45% from last year’s 6.61%. Average returns for Conservative funds were 5.28%, from 4.54% last year.
“Average returns indicate mixed performance, but our research also showed some poor performers had pulled the market down. We also saw some notably impressive performances across different investment profiles.
“What this really tells us is how important it is to be informed about your KiwiSaver provider and its investments. There is no silver bullet to finding the right fund – it’s about doing the research and making sure your provider is delivering for your needs, including risk appetite and life stage.”
Today, Canstar is proud to announce the joint winners of its Outstanding Value KiwiSaver Scheme Provider Award for 2019, being ASB and BNZ. The two providers have worked actively over the last year to offer KiwiSaver schemes which offer excellent value propositions to members.
ASB has been a joint winner both years the award has run, while BNZ is eligible for the first time due to being in the KiwiSaver market for five years.
ASB’s KiwiSaver scheme offers a comprehensive selection of features, including easy online sign-up and access to informative publications, and no minimum opening balance. It also offers a KiwiSaver and retirement call centre which is available for members seven days a week.
Further, ASB’s funds performed above average across the market. Its Balanced fund was a notable overperformer, returning 8.02% compared to a market average of 6.45%.
Aidan Vince, ASB head of KiwiSaver, said “it’s exciting to be recognised for the work our team does on a daily basis to help our customers reach their savings and retirement goals.
“Consistent returns are an important part of investing so we are proud that whilst keeping costs low we have continuously achieved great outcomes for our customers. Having that effort acknowledged again by Canstar is incredibly rewarding.”
BNZ’s KiwiSaver offering was also impressive. The bank went straight to the top of the rankings in large part due to its decision to dramatically cut back on fees. The bank’s management fees have been slashed while its membership fee dropped to zero from May this year.
BNZ’s strong customer service proposition, with easy online set up, was also a factor in its success. Further, it was committed to education around KiwiSaver, with clear information easily available online.
Peter Forster, BNZ General Manager for Wealth, said winning the Canstar award was a great vote of confidence in the BNZ KiwiSaver scheme.
“We are focused on delivering a high-quality, low-cost scheme that produces quality outcomes for our members.
“This year we’ve made some huge changes to the BNZ KiwiSaver Scheme with the intent of delivering outstanding value to our members, so this award particularly resonates with us.”
Individual funds were also awarded 5 star ratings across different profiles. BNZ, ASB and Milford Funds received 5 stars in the Growth profile. ASB, BNZ and SuperLife were awarded 5 stars in the Balanced profile and AMP and Milford Funds were awarded 5 stars in the Conservative profile. ANZ also took 5 stars in the Defensive, Cash and Aggressive profiles. Finally, SuperLife took 5 stars in the Defensive profile and Kiwi Wealth in the Cash profile.
*Calculated over 100 scenarios around an average $20,000 balance.