ANZ removes membership fee from KiwiSaver funds

ANZ is to cut the $18 membership fee from its KiwiSaver funds. Photo / Dean Purcell.

ANZ - the country's largest KiwiSaver provider - is to remove the membership fee from its KiwiSaver funds in the latest fee reduction move by the industry.

The bank which manages $35 billion on behalf of 650,000 KiwiSaver customers said it would drop the $18 fee from today.

It will also reduce the management fees on its conservative funds and conservative balanced funds by 0.22 per cent and 0.15 per cent respectively.

Stewart Taylor, ANZ's acting managing director, funds management, said that meant a person with $20,000 invested in its conservative fund would see their annual fee reduce from $192 to $130.

"These fees will ensure a simpler fee structure and provide greater value for money for our more than 650,000 KiwiSaver members.

"We regularly review fees as we achieve greater economies of scale. This latest change particularly benefits members with lower balances or those just starting out."

The ANZ move comes after BNZ, Westpac and AMP all announced reductions in fees in recent months in the wake of mounting pressure on the sector over the fees it charges.

This week a report by the Financial Markets Authority revealed KiwiSaver providers collectively earned $650.3 million in fees in the year to March 31 - a 21 per cent rise on the previous year - after strong investment returns boosted funds under management to $81.6 billion.

In April the FMA told providers they must review their fees annually and prove they are providing value for money or face potential regulatory action.

The FMA released guidance to fund managers and their supervisors over fees amid concerns that KiwiSaver members are not getting good value for money.

The fee reductions also come after a major government shake-up of the default KiwiSaver providers in which five providers including ANZ will lose their default status and see those members moved to new funds after November 30.

The six new default providers will all offer lower fees putting pressure on the rest of the market to compete with them.