Juno will charge higher fees for some of its KiwiSaver members from December 1.
Juno will charge higher fees for some of its KiwiSaver members from December 1.
Teenage members of the Juno KiwiSaver scheme and those with low balances will be charged fees from December 1. Other members also face higher fees.
Fund manager Pie Funds launched Juno two years ago with no fees for under 18-year-olds and those with a balance under $5000.
Paul Gregory, chiefoperations officer at Pie Funds, said it had decided to increase fees after looking at the costs from its investment management approach and current membership base and how they would be affected by its plans to achieve scale rapidly.
The Juno KiwiSaver scheme has around 9000 members with $250 million invested.
Gregory said despite the increase, Juno remained one of the lowest-cost KiwiSaver providers in the market.
The average fee for Juno members with a KiwiSaver balance of up to $50k would be 0.72 per cent, an average of 0.77 per cent for those with balances up to $200k and 0.65 per cent for those up to $400k.
Morningstar data shows the average fees for a KiwiSaver fund range from 0.69 per cent for a conservative fund up to an average 1.06 per cent for a growth fund.
Most KiwiSaver providers also charge an annual fee, which averages around $27.
After December Juno will continue to be fee-free for under 13-year-olds. But those 13 to 18 will pay $2.50 a month, as will those with a balance of under $5k.
Those with a balance of between $5k and $15k will stay on the same rate of $5 a month and fees for those with between $15k and $25k will go from $5 to $8 a month.
Paul Gregory, chief operations officer at Pie Funds, the manager of the Juno KiwiSaver scheme.
Gregory said nearly half of its members would still be paying less than $100 annually in total.
Members with a balance of more than $25k will pay $20 a month, up from $15. The biggest jump in fee is for those with balances of between $75k and $100k whose fees will rise from $25 to $60 a month.
Gregory said Juno members would continue to receive value for money even after the increase and pointed to performance data that showed Juno funds had topped their Morningstar categories for the year to September 30 and had been among the top performers since inception.
"While less than three years is a short time to evaluate performance, Juno's low fees, including after the increase, means competitors must – month-after-month – perform substantially better than our funds just to achieve the same result. This is not easy."
No to default tender
Gregory said it had also decided not to tender for default provider status.
The Government is reappointing default providers - those who are allocated members who do not pick their own provider.
Gregory said although it was confident its fee structure would be very competitive it did not have a long KiwiSaver track record and none at scale.
"We fully understand the Government's need to manage the financial and political risk of a provider struggling – or failing – to manage a potentially large number of new default members.
"We are growing rapidly, especially in the past 12 months, and will continue to build the scale and the infrastructure to support it. But we need to manage the cost and disruption of that, to a timeline better aligned with the interests of our shareholders, investors and staff."
