KiwiSaver scheme exceeding expectations - boss

Former Tower chief executive Sam Stubbs has launched a low-fees KiwiSaver fund called Simplicity. Photo / Doug Sherring

New KiwiSaver provider Simplicity already has $50 million in assets and more than 2000 members, its managing director says.

The not-for-profit scheme was launched on August 1 by former Tower and Westpac executives promising to shake up the industry and save the average member up to $65,000 by the time they retire.

Sam Stubbs, who previously headed Tower's investment business, said Simplicity was doing better than expected and was facing the "high-quality problem" of needing to take on additional staff.

"Our budget was for $25 million in 12 months so we beat that in five weeks - we're already double that - so we're tracking well ahead of expectations," he said.

"We've got $50 million in assets under management and over 2000 members. I guess what's most important about that is that the fee savings is already $300,000 a year so we're saving members $150 each on fees."

Two large corporates - Genesis Energy and DB Group - had made Simplicity their preferred KiwiSaver supplier, while talks were underway with a number of other organisations, Stubbs said.

Simplicity will use US low-cost fund manager Vanguard which employs a passive investment approach.

Passive funds track market indices and cost less than active funds where stock trading requires more work.

Based in Pennsylvania, Vanguard manages approximately US$3.4 trillion in assets and has thrived on undercutting fees in the US and around the world.

Fees for the average KiwiSaver are currently 1.3 per cent a year.

Stubbs, who is self-funding the start-up, has said Simplicity's administration fee will be just $30 a year, plus a 0.30 per cent a year fund management fee.

More than 2.6 million people are signed up to KiwiSaver with around $34 billion invested.