Mike Bain/cvnznews.com
The Financial Markets Authority’s latest KiwiSaver report reads like a banquet menu — and far too many fund managers are still feasting. While New Zealanders tighten belts and juggle rising costs, KiwiSaver providers have quietly helped themselves to another year of swollen fee revenue, with total charges climbing to $978 million. Fees as a proportion of funds under management have barely budged, stuck at 0.7% for three years, even as balances surge past $138 billion.
Simplicity Managing Director Sam Stubbs says the report exposes an industry that has grown very comfortable dining at the KiwiSaver trough. “As funds grow, economies of scale should benefit members. Instead, the report shows many managers are simply pocketing the gains,” he says.
Stubbs says the pattern is unmistakable: high fees remain high, even as providers enjoy the windfall of ballooning balances. “It’s hard to call it anything other than greed — a business model built on hoping people won’t notice what they’re paying, or what they’re paying for.”
As a not‑for‑profit provider, Simplicity will drop its fee to 0.23% in October, a level Stubbs says is more than enough to run a large, passively managed scheme — including donating 15% of fees to charity. “When you can operate sustainably at 0.23%, you have to ask what exactly is being funded by fees two or three times higher. In a cost‑of‑living crisis, it’s excessive.”
Stubbs says the next government should stop pretending the industry will fix itself. “If managers won’t share the benefits of scale, then a fee cap and levy on high‑fee providers should be on the table. New Zealanders’ retirement savings shouldn’t be treated as a perpetual revenue stream.”
Simplicity’s latest fee cut — its eighth in a decade — takes effect 1 October.
