Funds stall weapons divestment

KiwiSaver funds are still investing in companies that make cluster bombs, mines and nuclear weapons, despite a public outcry about the holdings.

Pressure went on providers last year when it was revealed that many New Zealanders’ KiwiSaver money was going into investments in armaments.

That prompted the industry to promise change.

But four of the nine default KiwiSaver schemes – ANZ, Westpac, Mercer and Kiwibank – still hold the investments.

Sam Stubbs, the managing director of KiwiSaver provider Simplicity, said the four schemes should have their default status suspended until they followed through on promises to divest.

KiwiSaver members are assigned a default scheme if they do not make their own selection when they join.

‘‘The companies’ excuses have been absolute rubbish. Those four providers have been petulant and greedy,’’ Stubbs said.

An ANZ spokeswoman said although it had divested all direct funds in controversial weapons and tobacco in September last year, there were still some passive investments in international equities in its default fund.

The bank said it would set up its own ethical fund and transition the default funds soon. ‘‘We will be confirming details in the next few weeks of a new investment solution which will ensure there is also no indirect investment in these kinds of companies for members of our ANZ Default KiwiSaver Conservative Fund.’’

Gareth Morgan Investments’ Kiwi Wealth KiwiSaver scheme, distributed by Kiwibank, invests in a passive fund run by Vanguard International, which has a small exposure to companies that make bombs, weapons and mines.

Vanguard has since created a new ethical fund but the bank has not shifted its investment to it.

Kiwi Wealth said it was not in the best interests of clients to do so because it was expensive and created international tax implications. It is developing its own approach instead, which should be in place within the next quarter.

BTNZ, as manager of the Westpac KiwiSaver scheme, has a process under way to exclude any exposure to munitions and tobacco across all KiwiSaver Funds. This is expected to be complete by the end of this year.

Mercer continues to review its passive investments.

Simplicity transferred its investments into Vanguard’s ethical fund.

Stubbs said the default providers had had enough time to transition funds if they wanted to.

‘‘They’ve been able to do this change since the middle of December, they’ve just chosen not to.