Lost in admin: a KiwiSaver's lament

KiwiSaver is more a feat of administration rather than investment. I am willing to bet that over the next 20 years and beyond, the investment returns generated by KiwiSaver schemes will be almost indistinguishable per level of risk. At any one time, there will be a few outliers who through either skill or luck (or a lack of both these qualities) appear amazing or abysmal - watch out for the marketing - but in the long term, investment sameness will prevail.

What might make a bigger difference to long-term returns, however, is how efficiently KiwiSaver providers and the other three or four parties (eg the IRD, fund manager, IT helpdesk) involved in processing the whole business take care of the paperwork. With just over 1 million users now signed up to KiwiSaver, and 30-odd providers vying for their trade, it's an administrator's nightmare.

The potential for admin breakdown is huge and, as I found out this week, the system creaks under the load. Following up on a voluntary scheme payment for a family member, deposited in time to claim an annual tax credit, the nice AXA woman told me that "there's been a problem with payments put in on that day". Just that day, what bad luck. So where was the money? Dunno, they're looking for it. I hope they find it. She promised they would let me know as soon as it turns up.

Maybe it's just AXA. I called Mercer to trace a similar voluntary payment, this time sent through the IRD rather than direct to provider. There was no record of it.

"If it's with the IRD we won't know about it," the surly Mercer Australian phone service professional informed me.

So how long does it take to move from IRD to Mercer. Dunno, depends. It was only when I pushed him by pointing out that Mercer has been running a KiwiSaver scheme for almost two years and that it might have developed a sort of general sense of how long these things take, that he came up with an answer.

"Maybe a month."

There must be a million stories like these. There will be millions more.

So why is there the dumb idea floating around that the New Zealand Superannuation Fund (NZS) should be dissolved and its $12 billion handed out on a pro rata basis to KiwiSaver providers? Why transfer money from a relatively efficient fund that will perform no worse (and most likely better) than the average KiwiSaver scheme over the long term, to a bunch of entities with leaky admin systems and expensive marketing and reporting functions to uphold?

And don't tell me to call the helpdesk.

 

David Chaplin

 

 

Photo: The Aucklander