KiwiSaver: cheap at $26m in fees

Over the 12 months to March 31 this year, KiwiSaver providers collected a total of about $26 million in fees, according to my calculations.

If my calculations are correct - of which I have my doubts - then KiwiSaver has come reasonably cheaply. Based on total funds under management (FUM) at March 31 of about $2.6 billion, a figure I arrived at in my recent  KiwiSaver survey, then the whole show has been produced for about 1 per cent of FUM - which in fund manager and superannuation terms is a real bargain.

But as I said, my calculations may be off. Although I believe I did a thorough job, considering the circumstances, my fee numbers didn't look absolutely, actuarially consistent.

And that's because there is little consistency in the way KiwiSaver providers report fees. I must've waded through 40-odd reports looking for the word 'fees' and found it in thousand different places.

Call me suspicious if you like but I'm positive there were other fees lurking somewhere out of my gaze, masquerading, perhaps as 'management expenses'.

It's not that providers are necessarily hiding their true fees, it's merely that there is no agreed standard for how they are reported - a problem that extends across the managed funds industry.

Last week a relatively new fund manager, Pathfinder, issued a challenge to the industry to come clean on how it describes and collects fees. It is true the Investments Savings and Insurance Association (ISI) - a collective of fund managers and insurers - is working on a new fee disclosure standard but you have to wonder why it's taken so long.

In the interim, my attempt at KiwiSaver fee clarity will be published in this month's edition of ASSET magazine. Out as soon as I can get it finished.


David Chaplin