The KiwiSaver default migration due to start this week looks likely to fall well short of early estimates as incumbent providers report higher-than-expected member retention rates.
Based on data and feedback from most outgoing default schemes, the final transfer numbers should be in the order of 215,000 members and $2 billion.
The Ministry of Business, Innovation and Employment (MBIE) originally forecast about 300,000 members and $3.6 billion would move under the-then proposed default shake-up.
But the 2021 Financial Markets Authority (FMA) annual KiwiSaver report revised the figure down, noting as at June 30 “there were 263,000 members of the five schemes that were not reappointed who will be transferred to one of the six appointed schemes”.
While the government ordered the five sacked providers – AMP, ANZ, ASB, Fisher Funds and Mercer – to stop marketing to non-active default members after September 30, retention numbers continued to rise.
AMP, for example, told Investment News NZ that it stands to lose about 65,000 default clients this week – compared to a prospective 80,000 touted earlier this year.
“Our current default portfolio of approximately 65,000 clients represents 5% of our total assets under management and 2% of total revenue,” an AMP spokesperson said.
The group, which recently switched most of its assets to passive BlackRock-managed funds, has about $12 billion under management across its KiwiSaver and other schemes, implying outflows of roughly $600 million through the default transfer – well under the $800 million to $900 million flagged in AMP corporate reports.
“We continue to invest extensively in the ongoing strengthening of our offer to clients and focus on supporting them to achieve a great retirement,” the spokesperson said. “This is underpinned by the renovation of our AMP KiwiSaver Scheme through the appointment of BlackRock as our key investment partner earlier this year.”
AMP has the largest default book after inheriting the Axa scheme in 2013: in 2019, MBIE reported the group held over 112,000 default-enrolled members.
Likewise, Fisher Funds has seen a large uptick in default member conversions ahead of the November 30 transition deadline, according to chief, Bruce McLachlan.
McLachlan said Fisher looks set to farewell about 36,000 members and $340 million through the default regime handover process.
The 2019 MBIE data shows Fisher had more than 68,500 default members at the time. Fisher became a default provider after buying the Tower investments in 2013, renaming the KiwiSaver scheme as Fisher Two.
“We’ve always been pretty good at converting default members to active choice,” he said. “And, while it’s disappointing to lose any members, we’ve had a high level of engagement [over the last few months] with many opting to stay.”
Fisher also formally takes over the Aon KiwiSaver scheme this week, bringing around 20,000 members and $800 million across.
It is understood ANZ, ASB and Mercer will lose between 35,000 to 40,000 members each come December 1 – again, all at the lower end of estimates.
By that reckoning, final member transfer numbers should range between 205,000 to 220,000 and (based on the average Fisher default transferee member balance of $9,400 or so) a collective $2 billion: equating to roughly 35,000 and $330 million apiece for each of the six newly appointed default schemes.
McLachlan said all providers involved in the process are working to ensure a smooth transition as assets move on market over the next couple of months.