No deadline for KiwiSaver clean-up
Minister resists hard line call for KiwiSavers
The Government won’t put a deadline on when it expects KiwiSaver providers to exit investments i n banned weapons’ makers instead insisting they should act as “quickly as possible”.
The Green Party has called for a hard line to be drawn on when fund managers should have to exit the investments after RNZ reported ANZ, Kiwi Wealth, Westpac and Mercer still had passive investments in companies linked to cluster bombs, antipersonnel mines and nuclear weapons.
The report comes five months after the Herald and RNZ first revealed the controversial investments stoking concern from consumers and worries that the investments may be in breach of New Zealand’s law.
Green Party co-leader James Shaw said the Government’s weak approach was letting too many KiwiSaver providers off the hook for behaviour that was unethical and possibly illegal.
“Parliament’s intention was clear when it passed a law banning investment in companies producing cluster bombs in 2009. The Government must set a clear deadline for when all KiwiSaver funds should dump their investments in companies involved in the manufacture of these horrific weapons,” he said.
But Jacqui Dean, Minister for Commerce and Consumer Affairs, said it was up to providers to act as soon as possible.
“When the issue of indirect investment in munitions was raised late last year, KiwiSaver providers undertook to divest those investments.
“I expect providers to do what they said . . . and exit from these investments as quickly as possible.”
Asked what action the Government would take if providers did not exit the investments, Dean said she expected providers to listen to the concerns of consumers.
Sam Stubbs, the boss of new KiwiSaver provider Simplicity, said the funds should have their default status suspended.
Stubbs said the four KiwiSaver providers had enough time to transfer out of the investments and now they should be punished for not doing so.
“They clearly feel they can take their time. They need to receive the message that this is not trivial.”
But there is no sign the Government will take this option.
Dean said if providers had breached the law it was a matter for law enforcement agencies and investment choices that were lawful were a matter for the providers.
“However people always have a choice about which provider to be with.”
An ANZ spokeswoman confirmed that its default fund still had some passive holdings in weapons makers via a passive index tracking fund.
But these would be transitioned to a fund managed by the ANZ shortly to ensure it had the flexibility to make further changes investors might want.
She said the ANZ believed it was important to take the time to develop a future-proofed solution as it recognised that investor views on ethical investment would continue to evolve.
Kiwi Wealth chief investment officer Simon O’Grady said it had consulted with members on what they wanted and then had to go through an evaluation process to decide what it would replace its current offering with.
He said it had elected not to go with Vanguard’s new ethical fund because it used an Australian unit trust which came with a significant tax drag for investors as well as a higher fee.
“Clearly to double fees and put a tax impost on investors is not the right outcome. So we decided to build our own.”
O’Grady said it was on track to deliver that solution in the second quarter of this year.
A Westpac spokeswoman confirmed it would exit its investments by the end of the year.