A KiwiSaver provider has heeded an industry-wide warning from the regulator to lower fees.
The FMA had been concerned about high fees compared to similar funds in other countries and a lack of a clear link between fees and performance. Photo: 123RF
Westpac moved on Tuesday to reduce fees on its KiwiSaver funds, managed by BT Funds Management, by as much as 25 basis points and removed its annual $12 administration fee.
"These changes will provide real savings for all members, regardless of their fund balance or stage in life," said Westpac NZ acting chief executive Simon Power.
The Financial Markets Authority (FMA) [https://www.rnz.co.nz/news/business/440444/financial-markets-authority-still-targeting-kiwisaver-funds-charging-unreasonable-fees
warned] in April that fund managers must review their fees and justify them in a report each year. It had been concerned about high fees compared to similar funds in other countries and a lack of a clear link between fees and performance. The FMA said it was not telling providers what to charge but it wanted to see changes in behaviour.
Power said Westpac last cut fees at the end of 2019, and the current changes would take effect from the end of September. The new Default Balanced Fund would be open to members in December.
"Removing the annual administration fee will have a particularly positive effect on members with low balances."
"Annual fees on a $20,000 balance will reduce from $130 to $80 for our Conservative Fund, $158 to $100 for our Balanced fund and $172 to $110 for our Growth fund," he said.
Westpac's KiwiSaver provider BT Funds Management was one of six default providers appointed in 2021 following a seven yearly government review of the default provider scheme.