KiwiSaver default fund tenders are now go after the government released the ‘request for proposal’ (RFP) documents this afternoon.
The just-published RFP documents confirm both the fossil fuel exclusion rules and balanced fund asset allocation settings required when the new default regime kicks off next December.
It appears the government has opted for the tougher of the two fossil fuel exclusion definitions mooted in August with the final default schemes asked to cut stocks with:
- own proved or probable reserves in coal, oil, or gas, and derive at least 15% of their revenue from exploration and extraction of coal, oil or gas; or;
- has its primary business activity in a long list of banned subsectors including oil and gas drilling or equipment supply.
“For the purposes of clause subclause [definition] oil includes tar sands, gas includes shale (as a source of gas) and metallurgical coal is not included in the term coal,” the government document says.
With the change from conservative to balanced fund asset allocation, any propsective default provider “must not, in relation to the default investment product invest less than 45% or more than 63% of default product assets in growth assets”, the RFP says.
In a release today, James Hartley, Ministry of Business, Innovation and Employment (MBIE) commerce general manager, said: “The aim of this RFP process is to ensure those funds work in the best interests of Kiwis who are in default funds, and to better reflect what people want from them.
“Earlier this year, the Government changed the default provider settings following consultation. The new settings are reflected in the RFP criteria that applicants will need to meet.”
As well as the balanced fund and fossil fuel exclusions, default providers would have to satisfy other conditions including better member engagement tools and low fees.
The government documents also confirm any “non-active default members” of incumbent providers that fail to make selection this time around would be forcibly redistributed among the approved default schemes.
Any providers hoping to stay on, or join, the default carousel have until close of business on December 18 this year to lodge RFP responses.
MBIE is expected to confirm the new panel of default providers in the first half of next year. The current list of nine default providers includes: AMP, ANZ, ASB, BNZ, Booster, Fisher Funds, Kiwi Wealth, Mercer and Westpac.
