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4.2 Structure of the KiwiSaver Market

In the seven years of the existence of KiwiSaver, a number of factors can be observed relating to the competitiveness of the fund manager market. The KiwiSaver funds management market is moderately concentrated – a group of six banks and financial services firms account for over 90% of AUM. In addition, the providers that manage default schemes hold a significant place in the market, with five such managers controlling approximately 70% of AUM up to June 2014 and upon the appointment of nine managers from 1 July 2014, that increased to over 90% of AUM. Over time, the number of significant providers has reduced, as M&A activity and consolidation occurred.

In order to determine the effects of these features of the market structure and the competitiveness and efficiency of the market, we have applied standard measures of competitiveness, examined any market power of certain sub-groups of managers and made observations about trends in consolidation, barriers to entry and market power.

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