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Accessible HTML version
Only the Proposal and Executive Summary sections of this Cabinet paper are extracted below in HTML. If you require a full HTML version please contact [email protected] and cite DEV-19-SUB-0200 as a reference.
Cabinet Paper DEV-19-SUB-0200: KiwiSaver Default Provider Arrangements: Release of Discussion Paper
1. This paper seeks agreement to release a discussion paper for public consultation on the review of the KiwiSaver default provider arrangements.
2. KiwiSaver members who do not choose their own fund and are between 18 and 65 years of age are automatically enrolled in a “default fund”. The terms of appointment for the existing nine providers of default funds expire on 30 June 2021. We are the Ministers responsible for appointing new default fund providers.
3. After 10 years of KiwiSaver, we now know that many KiwiSaver default members are not engaging with their KiwiSaver accounts in the way that had been expected. A significant number of people (around 430,000) have stayed in default funds without making an active choice to do so.
4. The settings for default funds can make a significant difference to a person’s retirement income, so it is important that the default funds work well for people.
5. The discussion paper seeks feedback on what, if any, changes should be made to the terms of appointment for providers of default funds. The paper seeks feedback on the investment approach for default funds and options for reducing fees charged to default members. The paper also seeks feedback on responsible investment and whether default settings should be used to support the development of New Zealand’s capital markets.
6. There may be strong stakeholder responses to some of the options presented in the discussion paper. We expect that the release of the discussion paper will provide a positive opportunity for full and rigorous debate on the default provider arrangements. In terms of mitigating the risk of strong stakeholder responses, the discussion paper makes it clear that we are consulting on all options, and invites submitters to put forward options not set out in the discussion paper.
7. The discussion paper will be released for public consultation following Cabinet approval. The Ministry of Business, Innovation and Employment (MBIE) and the Treasury will then analyse the submissions and provide us with further advice. We intend to seek Cabinet policy decisions on the settings for the KiwiSaver default provider arrangements by November 2019, ahead of a procurement process beginning in 2020.