First KiwiSaver fund merger to be announced tomorrow

The first big consolidation among the KiwiSaver providers is due to be unveiled tomorrow, with the union-backed IRIS scheme poised to make an announcement.

IRIS says it is going to make an announcement "regarding a consolidation of the IRIS KiwiSaver scheme into an existing larger provider."

Talk of KiwiSaver consolidation has been circulating for some time, with the 31 providers and 54 schemes seen as too many for a country the size of New Zealand.

"There is a general feeling that 54 schemes is overdoing it for the size of the New Zealand market," said Bruce Kerr, chief executive of the Association of Superannuation Funds of New Zealand earlier this month.

Tower chief executive Sam Stubbs said he though there would be "between 10 to 20 providers within two to five years' time because a lot of providers are funding KiwiSaver from profits made elsewhere and those profits have gone away now."

While there has not been any visible transactions in regards to industry consolidation, he said Tower had been approached a number of times in the past couple of months by those testing the water.

"We are becoming very aware of people struggling to run their businesses. I would be surprised if there wasn't a transaction by the end of the year."

One of the issues with a provider selling their book of members to someone else is that there is no compulsion for the saver to stay with that new provider. "With the rules the way they are it allows KiwiSaver to move at any time so that makes it difficult to price a book," said Bruce Kerr.

The IRIS funds are managed by Tower, which also has its own KiwiSaver investment products.

IRIS was established in 1990 by a group of Unions "keen to encourage working people in New Zealand to start saving for their retirement, and where possible with contributions from their employers."

IRIS has 5,000 members, 130 participating employers and the trustee manages $25million in assets.

It runs both traditional superannuation schemes and a KiwiSaver scheme.

IRIS' share holders are the National Distribution Union, the Engineering, Printing and Manufacturing Union, the Nurses Organisation and the Service & Food Workers Union Nga Ringa Tota.

News about what is to happen with the IRIS KiwiSaver fund is expected around 12.45pm tomorrow.

- NZHERALD STAFF