Top tips: On selecting a KiwiSaver scheme

Roger Thompson. Photo / Supplied

Roger Thompson, managing director of accounting firm Staples Rodway's Auckland office, is trustee of the firm's KiwiSaver scheme. He offers some advice when selecting a KiwiSaver scheme.

I've heard there's to be a consolidation of KiwiSaver schemes in the future. Should I be with a large scheme?

Some smaller schemes could be struggling but it does not follow that smaller funds cannot be profitable and provide good returns.

What are the advantages of a smaller scheme?

Some smaller schemes may operate more efficiently than some of the larger schemes with inefficient structures. Larger size may give economies of scale but it doesn't follow that savings are passed on to investors and size is no guarantee of good investment performance.

Should I be with a conservative fund in this economic climate?

Most schemes with Balanced and Growth Funds have suffered some losses. Although investors may think of switching into Conservative in this economic climate, Balanced and Growth should outperform Conservative over the long term and there is a risk of missing out on potentially large returns as the global economy comes out of recession.

What other things should I look out for?

Schemes that use independent investment managers may be more competitive, long-term, as those managers can be replaced if their performance is not up to scratch. I would be wary of schemes in which there is a requirement to put investors' money in the hands of in-house investment managers regardless of their performance.

Should I be wary about companies that promote their schemes with fancy marketing?

Yes - look for schemes that keep their promotion low key.