AMP NZ earned the right to shop its KiwiSaver scheme to 21,000 supermarket staff in a preferred provider deal with NZ’s largest private employer last week.
Under the arrangement with the Australian-owned Woolworths, AMP will pick up defaulted members in the high-turnover Countdown supermarket chain as well as gaining access to all staff for promotional and general advice purposes.
AMP has likely discounted its KiwiSaver fees, too, although NZ chief, Jeff Ruscoe, said any price specials were “commercially sensitive”.
Last year AMP shifted most of its KiwiSaver investment options to passive portfolios run by BlackRock, trimming fees a little to about 0.8 per cent for the indexed diversified funds.
Woolworths operates over 185 Countdown supermarkets in NZ with over 21,000 staff including 12,000 already in KiwiSaver schemes. Last week Countdown agreed to a 12 per cent pay hike for employees, signalling a hit to profits ahead.
While supermarkets traditionally churn through staff, many of them first-time workers or students, Jeff Ruscoe, AMP NZ chief, said the sector also included longer-term employees in various tiers.
Jeff Ruscoe, AMP NZ chief, said the firm would have its 10 on-the-ground advisers available to support Countdown employees with KiwiSaver queries as well as a similar number offering phone consultations.
“For Woolworths employees who come through the preferred provider without making an active selection they will go into the AMP Lifesteps programme which selects a fund based on their age,” Ruscoe said. “AMP will them actively follow up with each of these members to help them make an active fund selection.”
AMP boasts preferred provider relationships with 2,800 companies in NZ but the alternative work-based KiwiSaver route has not been particularly popular to date.
According to just-released Inland Revenue Department (IRD) statistics, the total number of auto-enrolled KiwiSaver members remaining in “an employer’s nominated scheme decreased from 206,296 to 201,532” during the 12 months to the end of August this year.
For the 10-year period ending June 30, 2022, the number of KiwiSaver members entering through employer-preferred scheme auto-enrolment increased “from 183,094 to 211,442”, the IRD data shows.
By contrast, the IRD says over the same 10-year timeframe the number of KiwiSaver members “who joined a scheme through active choice increased, from 1.3 million to 2.4 million”.
The AMP KiwiSaver scheme is still smarting from the loss of default status last December. Over the 12 months to the end of March this year, AMP lost a third of its members while funds under management declined by almost 10 per cent.
As the Investment News NZ 2022 KiwiSaver report shows, however, the default shift only accounts for about two-thirds of the AMP KiwiSaver drop during the year with the scheme continuing to bleed members and funds in line with a decade-long trend.
Ruscoe said the Countdown contract showed AMP “investment transformation” under BlackRock was starting to pay dividends.
“We’ve got a clean sheet business offering and a stable platform to return us to growth,” he said.
The much-reduced NZ business consists of the 30-strong AdviceFirst group (now fully-owned by AMP), a troupe of in-house advisers, the $5.4 billion KiwiSaver scheme, the $3.2 billion NZ Retirement Trust (NZRT) employer super service, a small retail investment platform and various ‘legacy’ products.
Ruscoe said AMP was looking to rationalise the legacy range – mostly older retail super products.
Former AMP head of NZRT and legacy products, Wayne Hirt, left the group in September with his duties now split among two, relatively new, managers.
However, he said the employer super master trust remains a key product, dismissing sale rumours.
“We don’t consider NZRT a legacy product,” Ruscoe said.
According to the AMP NZ 2021 annual report, the KiwiSaver scheme contributed almost half ($55.9 million) of the group’s total $117 million revenue for the year while the NZRT tipped in $31.8 million.
Bagging Countdown will likely add little to the tally in the short-term at least but the deal marks an interesting diversion in trans-Tasman AMP relationships.
Woolworths sacked AMP Australia from a A$4 billion corporate super mandate this May, transferring the money to the Australian Retirement Trust industry fund.