The Commission for Financial Capability has welcomed fresh debate on the touchy subject of KiwiSaver fees after a new report suggested there was an "unhealthy focus" on fees - rather than the overall outcome delivered by various schemes.
The Australian-based SuperRatings research house says that substantial improvements have been made over the past year in terms of member engagement and servicing, but chief executive Adam Gee says that "the race to the bottom on fees remains particularly concerning."
Using it's unique 'value for money' assessment, SuperRatings has analysed over twenty-five KiwiSaver schemes in the five years to March 2016 and found that there is often an inverse relationship between fees and investment outcomes achieved by members. In short, those funds with the lowest fees will often provide lower investment returns than their higher fee counterparts.
“All participants within the KiwiSaver market, including regulators, providers and advisers should ensure that the key measure of the industry’s success should be the net after fee and tax outcome, rather than a race to the bottom on fees, which will benefit very few over the longer-term” says Gee.
As GM Investor Education at the Commission for Financial Capability, David Boyle welcomes the fees debate at a time when KiwiSaver balances are growing and members are looking for greater transparency about their real costs - and whether they are getting value for money.
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