Cheeky offer to banks on Kiwisaver fees

Banks want to postpone a requirement that Kiwisaver annual statements show fees in dollar and cents and not percentages.

Their plea for a delay until 2018 drew criticism from Sam Stubbs, founder of the low-fee Simplicity Kiwisaver scheme, who cheekily offered to help banks do the calculations if they were struggling.

The Ministry of Business, Innovation and Employment (MBIE) developed its plan after a survey found Kiwisavers struggled to understand annual statements where fees were quoted as percentages.

But in its submission on the proposal, the New Zealand Bankers’ Association (NZBA) says some bank schemes needed more time to manage the change.

Banks were also concerned about the ministry’s ’’disproportionate emphasis on fees’’.

But Stubbs said: ‘‘Simplicity is calling ‘BS’ on the Bankers’ Association claim that it’s too hard to tell members their Kiwisaver fees in dollars and cents.’’

‘‘What they’re saying is either they don’t know what they’re charging members, or they don’t want to tell them.

‘‘Either way, it’s sad for their Kiwisaver customers.

‘‘For the good of Kiwisaver overall, Simplicity is prepared to show the banks how to do it, free of charge. It’s easy to do. We’d love the banks to tell their members the whole truth, and we’re offering to help.’’

But NZBA chief executive Karen Scott-howman said: ‘‘While some of our members are in a position to include total fees paid in their 2017 statements, and will do so, members who can’t yet do it face a number of issues.’’

‘‘The calculation of these fees will be a complex exercise requiring significant changes, and development and testing,’’ Scotthowman said.

‘‘This wasn’t needed when their systems were designed.’’

However some schemes, such as Kiwibank’s Kiwi Wealth, do use easy-to-understand dollar terms.

Kiwi Wealth, which was founded by Gareth Morgan, pioneered something else MBIE wants added to Kiwisaver statements: projections of how much money each saver would have at age 65, and how much income they could potentially generate from it.

The NZBA called for that, too, to be postponed until 2018.

NZBA also criticised MBIE’S plan to force Kiwisaver providers to show fees in a highlighted circle in annual Kiwisaver statements.

‘‘In NZBA’S view this places a disproportionate emphasis on fees over performance. Whilst fees are an important factor in retirement outcomes, ultimately net performance (after fees) is more important.’’

Stubbs dismissed the NZBA’S claims.

‘‘Bottom line is, we think they want to keep the status quo so their profits stay high and their customers stay in the dark,’’ he said.