Mercer takes KiwiSaver flak

KiwiSaver default provider Mercer says it is unfortunate a note in its investment statement gave the impression it did offer mortgage diversion when it currently does not.

Several savers contacted the Herald after it was revealed less than 1000 homeowners had signed up to divert some of their saving to their mortgage through KiwiSaver.

The savers said they wanted mortgage diversion but providers had made it difficult to sign up and Mercer in particular had created confusion by telling investors it would offer diversion but had not so far done so.

"Mercer, who in their initial promotion on Kiwisaver said they 'would' provide it, have constantly put me off being able to apply as they have told their phone operators to say the legislation was not in place yet," one investor said.

Another said he had filled out the correct form only to be told that the scheme was not yet available because Parliament had yet to make changes to the legislation to allow it to happen.

Mercer's 2008 investment statement states: "If you've been a member of a KiwiSaver scheme for at least 12 months you may be able to divert half of your regular contributions towards the mortgage on your main home. (Note that while the Mercer KiwiSaver scheme allows mortgage diversion, not all KiwiSaver schemes do.)"

Mercer NZ chief executive Martin Lewington said it was unfortunate the old investment statement alluded to the fact that it did offer mortgage diversion when it did not. "A new one out in the next three to four weeks will make it clearer." But he said if people were feeling the pinch and wanted to put more money towards their mortgage they could cut their contribution to 2 per cent.

If people really wanted to be in a scheme which offered mortgage diversion Mercer would help them to arrange a switch, he said. Mercer has 69,500 members and $189 million in funds under management.