Weeding out poor KiwiSaver performers

We all want to avoid an underachieving fund when it comes to investing our money in KiwiSaver, but should it be up to the regulators to shut down the poor performers?

Australia’s Productivity Commission seems to think so.

It has just released its final report on a review of the superannuation industry which recommends ways to weed out the worst performers.

It wants all regulated super funds to carry out an annual test which would check the performance of the fund against a pre-set benchmark. If the fund is more than half a percentage point a year below its benchmark over a rolling eight-year period the fund would get a year to lift its performance or face being withdrawn from the market.

Members of the closed fund would then be transferred elsewhere.

There is now more than 10 years’ worth of performance data for KiwiSaver funds, which is enough time to see who the consistent poor performers are.

But the challenge would be in ensuring each fund’s benchmark is appropriate.

Checking and comparing the performance of your fund is not that difficult. Members can either use the quarterly Morningstar figures or the Financial Markets Authority’s KiwiSaver tracker tool.

Those who aren’t happy with the performance of their fund can switch easily by getting in touch with a different provider. The reality is if you care about avoiding the dogs of KiwiSaver the power is already in your hands without waiting for the regulator to step in.