Hon Lianne Dalziel
Minister of Commerce
KiwiSaver on track with default providers selected
Finance Minister Michael Cullen and Commerce Minister Lianne Dalziel today named six default providers they intend to appoint for KiwiSaver, the workplace-based retirement savings scheme which comes into operation in July next year.
Dr Cullen said the announcement of the default providers is an important step in the introduction of the scheme which aims to help New Zealanders develop long-term savings habits and will give them more choices for securing their financial futures.
The six providers selected will be ready to accept members when the scheme comes into operation on July 1, 2007. They are:
- ASB Group Investments Limited
- AMP Services (NZ) Limited
- ING (NZ) Limited
- Mercer Human Resource Consulting Limited
- National Mutual Corporate Superannuation Services Limited (trading as AXA New Zealand) and
- TOWER Employee Benefits Limited.
"The default providers are required to meet stringent criteria so as to ensure they are able to offer the kinds of retirement savings options New Zealanders want and need," said Dr Cullen.
"The appointments are subject to each company becoming a KiwiSaver provider and successfully implementing the necessary systems and processes that will be required for it to begin operating on 1 July 2007."
People who join KiwiSaver without nominating a preferred savings scheme will be automatically allocated to one of the selected default providers.
"We had a large number of applicants and our appointment of a number of default providers will ensure KiwiSavers who don't choose their own provider will still be looked after by a provider of high quality.
"This is important to ensure employees can have confidence in KiwiSaver.
"I am heartened by the level of interest being shown by the savings industry which gives me confidence that employees will have a good range of providers to choose from.
"KiwiSaver aims to make it easier for employees to save for their futures. It is essential New Zealanders develop better long-term savings habits so they can look forward with more confidence to a retirement that meets their aspirations.
"Today's announcement shows we are on track for a successful launch of the scheme. A public information campaign will be launched in the months before the 1 July start date together with forums to assist scheme providers," said Dr Cullen.
Lianne Dalziel said the selection of the companies to be appointed as default providers was an open competitive tender process where ministers were assisted by advice from independent external experts who carried out detailed evaluation of potential providers.
"In making our decision ministers followed a fair, consistent and transparent process which ensured all potential default providers were assessed on an equal basis. Remember too that any provider, not just a default provider, will be able to offer KiwiSaver schemes that meet the requirements of the KiwiSaver Act.
"New Zealanders will be able to actively choose a KiwiSaver scheme that best meets their specific savings needs. Members are not confined to using one of the default providers and membership is easily transferable as people's needs change over time," she said.
Mike Jaspers, Press Secretary to Dr Cullen, 04 471 9412, 021 270 9013
Elspeth (Ellie) McIntyre, Press Secretary to Lianne Dalziel, 04 471 9397, 021 227 9397
KiwiSaver is a voluntary scheme where employees elect to contribute 4 or 8 per cent of their gross salary. They will be automatically enrolled and will have eight weeks to opt out. To kick-start the scheme the government is providing a $1000 contribution and paying some scheme fees in order to improve the returns for savers. Employer contributions to KiwiSaver schemes will be exempt from tax, subject to a cap of the lesser of the employee's contribution or 4 per cent of their gross salary or wages.
The official KiwiSaver website http://www.kiwisaver.govt.nz provides full information on the scheme.
Independent financial information about retirement saving is available on http://www.sorted.org.nz.
Contact: Mike Jaspers, press secretary, 04 471 9412 or 021 270 9013
How did you choose the default providers?
An open competitive tender process was undertaken to select the companies to be appointed as default providers, where Ministers were assisted by advice from independent external experts who carried out detailed evaluation of potential providers
The companies to be appointed as default providers are required to meet stringent criteria so as to ensure that they are able to offer the kinds of retirement savings options New Zealanders want and need.
What criteria were used?
The default providers have been selected on a number of criteria, including their:
- Security and organisational credibility;
- Organisational capability;
- Proposed design of the providers Default KiwiSaver Scheme;
- Administration capability;
- Competitive fee levels; and
- Investment capacity/capability.
Do people have to join a default provider KiwiSaver scheme?
No, people do not have to join a default provider KiwiSaver scheme.
Employees starting a new job on or after 1 July 2007 will be automatically enrolled in KiwiSaver with the ability to opt-out. Those employees who do not opt out will be allocated to a KiwiSaver scheme in one of three ways:
- the member can actively choose a KiwiSaver scheme; or
- if no KiwiSaver scheme is chosen by the member, then they will be allocated to their employer's preferred KiwiSaver Scheme if they have one; or
- if the employer has not chosen a preferred KiwiSaver Scheme, then the member will be automatically allocated to a default KiwiSaver scheme by Inland Revenue.
All KiwiSaver schemes will be run by the private sector regulated similarly to existing registered superannuation schemes and governed by trust deeds. Any provider, not just default providers, will be able to offer KiwiSaver schemes that meet the requirements of the KiwiSaver Act.
Are default providers better than other KiwiSaver scheme providers?
The companies to be appointed as default providers were selected from amongst those who submitted a formal proposal in the competitive tender process and subsequently went through a detailed evaluation process. Any provider, not just default providers, will be able to offer KiwiSaver schemes that meet the requirements of the KiwiSaver Act and not all potential providers of KiwiSaver schemes will have chosen to seek selection as default providers.
The range of products offered by other KiwiSaver schemes may differ from those offered by default providers. Members will be able to actively choose a KiwiSaver scheme that best meets their specific needs.