Labour and Green politicians rallied to support legislation introduced to Parliament by coalition partner NZ First last week to consider maybe creating a government-run and guaranteed KiwiSaver scheme. Opposition National members, however, argued the proposed law would merely create a wasteful “talkfest”.
In the first reading last Wednesday of the KiwiFund bill, NZ First MP Fletcher Tabuteau, said the legislation “asks… experts to then consider the creation of a KiwiFund, a true Government provider, but there is no predetermination on that outcome”.
Tabuteau slated KiwiSaver “static fees”, comparing the $45 billion plus, 30-scheme regime with the $37 billion, 120-employee NZ Superannuation Fund that has “dropped [fees] substantially… from 0.7 to 0.1 [per cent]” in recent years.
(Coincidentally, also last Wednesday the parliamentary Finance and Expenditure Committee questioned NZ Super Guardians chair, Catherine Savage, on the potential effect of Labour plans to rein in public sector executive pay. The move would likely affect NZ Super’s current recruiting process to replace outgoing CEO, Adrian Orr.
“The ability for the Board to attract and retain a Chief Executive suitable for the Fund’s specialist commercial and long term investment focus is key to the Fund’s success,” Savage told the committee.”)
Tabuteau said under current settings in 20 years time total accrued KiwiSaver fees would reach $12 billion, rising to $20 billion two years later.
“That is a huge amount of money being taken out of the savings of New Zealanders’ retirement programmes for fees and whatnot,” he said.
Labour MP Tamati Coffey (who once fronted the long-running TV1 children’s show What Now) backed Tabuteau, citing claims that KiwiSaver schemes charged $40 million in fees in January alone.
“Yes, the KiwiSaver fund is doing well—$40 billion is what it’s doing—but when it’s skimming off the top and taking $40 million in fees, then we need to look at this,” Coffey said. “We need to decide what actually is going on here.”
Tabuteau said KiwiSaver provider arguments that higher fees related to higher member service didn’t wash given that “95 percent of New Zealanders with a KiwiSaver account are still with their default provider”.
According to the latest Inland Revenue Department (IRD) figures, about 573,000 members are in default schemes – or roughly 20 per cent of the current 2.8 million total membership. The IRD figures show about 1.2 million members were originally enrolled via the default process, indicating more than half have since made an active scheme choice.
Tabuteau said the proposed KiwiFund consultation panel would consider “transparency, ethical investments, and just what they’re getting for their money”.
Labour’s Michael Wood and Duncan Webb also spoke in support of the NZ First bill along with Green MP, Gareth Hughes.
National members Andrew Bayley, Lawerence Yule, Tim van der Molen, Barbara Kuriger and Andrew Falloon all spoke out against the bill, despite conceding that KiwiSaver fees could be reviewed.
Bayley said there was no need “to legislate to look at these issues”
“And, on that basis, I think all this is going to do is turn into another talkfest,” he said.
The KiwiFund Bill was referred to the Economic Development, Science and Innovation Committee for further consultation.