KiwiSaver providers will be forced to disclose more information to investors about what fees they are being charged and how much their nest egg will be worth when they retire.
Fees charged by KiwiSaver providers for a $30,000 KiwiSaver balance Photo: SUPPLIED/Sorted website
The stronger disclosure regime has been detailed in a discussion paper from the Ministry of Business, Innovation and Employment with submissions invited over the next month.
The key suggestions are that KiwiSaver managers would have to send investors a statement every year that included the amount of fees they had paid, the amount they saved for the year, and how much their savings would be worth when they turned 65.
Low cost not-for-profit company Simplicity's chief executive Sam Stubbs said it was a significant and welcomed step which would shake up the industry.
"Once they know exactly what they're paying and they can look at their KiwiSaver statement just like they look at their rates bill, or their power bill, or their phone bill and do like-for-like comparisons - they are going to ask some very tough questions - and the providers will have to justify what they're charging," he said.
Meanwhile, the Financial Markets Authority said fund managers as a whole were not doing well enough in engaging and educating their clients about assessing and making decisions about their retirement savings.
The FMA's annual report showed the number of new KiwiSaver investors was lower than the number of investors who switched funds, which meant companies would increasingly have to take customers from the competition.
FMA chief executive Rob Everett said the industry needed to up its game.
"They are going to have to really react to a more competitive environment and that can only be a good thing," he said.