KiwiFund idea closer to reality
A government-run KiwiSaver scheme may be on the cards after the KiwiFund Bill was drawn from the member’s bill ballot.
If passed, it would start work to establish NZ First leader Winston Peters’ dream of a publicly owned KiwiSaver scheme.
It would set up an independent working group with the aim of establishing a scheme, KiwiFund, owned and run by the Government.
The working group would advise on how the fund could be set up with a lower, transparent fee structure, keeping profits in New Zealand, giving preferential treatment to New Zealand-based investments and focusing on socially and ethically responsible investment.
The provider would be supported by a government guarantee.
The working group would also examine complaints about KiwiSaver providers’ fees, unethical investments and ‘‘profiteering’’.
KiwiFund was one of NZ First’s bottom lines in the most recent election campaign.
Massey University banking expert Claire Matthews said she was strongly opposed to the idea.
‘‘I have concerns about the possible structure of the fund, based on ideas that have been suggested in discussions to date, but my fundamental concern is simply the existence of a government-owned and operated fund,’’ she said.
‘‘One of the key concerns people have about KiwiSaver currently relates to a misunderstanding about government involvement in the scheme. People are concerned about government access to their money within KiwiSaver.
‘‘Currently it’s easy to reassure them that the government involvement is limited to the scheme design and the use of IRD as the conduit for contributions from their pay and their employers. However, the moment the government is the fund provider that all changes.’’
A government guarantee was a big risk for it to take on, she said, and created an uneven playing field. ‘‘Why would you be a member of a nongovernment-guaranteed fund?’’
Meanwhile, Milford Asset Management executive director Brian Gaynor has rejected calls to make the scheme compulsory. He said such a move would make fund managers ‘‘a bit complacent’’.
‘‘If everyone is compelled to contribute, it takes a lot of the competitive onus away from fund managers. Having a voluntary scheme keeps us on our toes.’’
But Gaynor said managers should be encouraged to put more money into local investments.
Although the NZX had risen strongly every year since 2012, only about 10 per cent of KiwiSaver funds are invested in New Zealand equities.
‘‘One of the problems is that the New Zealand sharemarket is too small and it doesn’t offer the kind of investment opportunities that people want.’’