KiwiSaver has been declared statistically competitive once more in the latest Melville Jessup Weaver (MJW) analysis of the sector.
The just-released MJW report found KiwiSaver competitiveness, as measured by the Herfindahl-Hirschman Index (HHI), improved slightly year-on-year after ending a little more concentrated in the previous annual period.
According to the study, the HHI score for the sector ranged between 1,100 to 1,200 when graded for assets, members and costs: markets scoring below 1,500 are generally considered competitive in a gauge accepted by the Commerce Commission in NZ.
“Locally, the Commerce Commission uses consistent language,” the MJW report says. “It calculated the HHI for the New Zealand grocery industry as 3,559 in its 2024 report, stating this was ‘highly concentrated’, and compared this to the ‘moderately concentrated’ fixed broadband market which scored 2,235.”
With 38 schemes and 34 providers in the mix, it may be no surprise that KiwiSaver statistically outcompetes the supermarket duopoly but the sector is still lopsided.
The MJW study shows the three largest owners – ANZ, ASB and Fisher – account for about half of scheme members and assets.
Only 10 per cent of members belong to schemes outside the 10 largest providers.
Nonetheless, the scales tipped slightly in favour of the non-top-10 providers, which clawed back about 0.5 per cent market share of both assets and members from the big end of town during the 12 months to March 31.
Default status has also had no discernible impact on provider market share post the 2021 rejig, MJW found – bar the obvious wholesale transfer of assets between the losers and winners of that process.
The-then Labour government chopped the number of default providers from nine to six in 2021 as all five of the remaining year-dot schemes in that cohort departed while two new appointees (Simplicity and SuperLife) came aboard.
AMP, ANZ, ASB, Fisher Funds and Mercer collectively lost about 300,000 members and almost $3 billion during the default cull.
After the regime change the overall market share of default providers (including their active choice members) fell from about 65 per cent to 40 per cent.
“We see almost no change in the last couple of years, with default providers holdings steady at around 40% of the member base,” the MJW report says. “The tacit endorsement from the government, then, does not appear to have led to the default providers gaining market share. With that said, in the past we have seen a gradual decay in default providers’ market share. This has not been evident in this cycle so far.”
In a wide-ranging study that taps into data supplied by Investment News NZ among other sources, the MJW study – authored by principal, Ben Trollip – also digs into scheme metrics across assets, members, fees and performance.
“Assets rose substantially in the year to March 2024, both at an aggregate level (+19%, to $111.8 billion) and for the average member (+16%, to $33,500). This mostly reflects strong performance from investment markets and managers. Membership grew 2%, a net gain of around 80,000 members. At 3.3 million members, KiwiSaver as a whole is 400,000 members larger than it was five years ago,” the report notes.
“Fees paid by the average member rose to $238 from $206 the previous year. When measured as a percentage of average assets, the expense ratio rose to 0.76% from 0.72%. This is still well down on the 0.95% seen in the year to March 2019.”
Click here stat for a free copy of the MJW study.