KiwiSaver funds topped $33 billion last year. But our latest satisfaction survey found many consumers aren't sure their retirement savings are being put in the right place. See what customers think of the 9 major providers in our survey.
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A majority of KiwiSaver investors (76%) want to know where their money is invested. Most said they’d be concerned if their cash was being put into “sin stocks” — industries open to criticism for their negative environmental or social impacts.
74% of KiwiSaver members said they’d be concerned if their savings were invested in the weapons industry. The same proportion expressed concern about funds being invested in pornography.
A majority also picked gambling, tobacco, nuclear power, uranium mining and alcohol investments as cause for unease. Oil and gas exploration was singled out by 1 in every 2 KiwiSaver members, though 18- to 24-year-olds considered it more significant: 73% picked it as a concern.
Last year, KiwiSaver investments were in the spotlight after Radio NZ reported 6 of 9 default providers had money in global tracking funds that invested in anti-personnel mine manufacturers or cluster bomb companies.
For many KiwiSaver members, news their money may be doing more harm than good would have come as an unwelcome surprise. The revelations also highlighted the information deficit consumers face in the KiwiSaver market, a major issue identified in our survey.
Almost half of all KiwiSavers either don’t think they have access to enough information to help make decisions about where they put their money (21%) or are unsure about what’s available (28%). One in 4 also think comparing providers is difficult.
On average, just 50% are very satisfied their KiwiSaver provider is keeping them up to date about their investment.
Even fewer (26%) are very satisfied their funds are ethically invested. As many as 4 out of 10 are unsure whether their KiwiSaver dollars are helping the world or harming it.
KiwiSavers in default funds are the least likely to be confident their money is invested for good.
Consumers who sign up for KiwiSaver but don’t pick a scheme are automatically allocated to one of 9 default funds.
However, few of these funds have routinely taken responsible — or ethical — investment into account when making decisions about where to put members’ money.
Responsible investment is a catch-all phrase for funds that factor in environmental, social or governance matters when deciding where money is invested. It may sound like you’re on the side of the angels. But in the investment world, interpretations are more fluid than you might think.
Fund managers rely on two main approaches to responsible investment:
Negative screening is used to weed out direct investment in certain areas — commonly sin stocks, such as gambling and tobacco.
Positive screening is used to select companies seen to be making a positive environmental or social contribution.
Regardless of approach, the decisions about what to screen in or out rely largely on the fund manager’s judgement. In some cases, the responsible investment mix ends up being little different to that of mainstream funds where assets are concentrated in stock exchange leaders.
KiwiSaver providers must include information in their product disclosure statements about whether responsible investment is taken into account. Of the 3 default funds that say it is, Kiwi Wealth (owned by Kiwibank) prohibits direct investment in arms, gambling and tobacco.
Kiwi Wealth chief investment officer Simon O’Grady says environmental, social and governance issues are considered where it invests directly in companies. But about 20% of investments are in global tracking funds that “may have some exposure” to sin stocks, he says.
Mr O’Grady says the company plans to launch a new global shares fund next month that won’t have exposure to tracker funds, allowing it to exclude investments that don’t comply with its responsible investment policy.
Fisher Funds, which also states responsible investment is considered, says it prohibits investments in funds or companies directly involved in manufacturing tobacco or military arms. It says it also looks at environmental, social and governance issues in making decisions to invest. Companies that don’t meet its standard are placed on a prohibited investments list. It intends to publish the list later this month.
The third company, Booster (formerly Grosvenor) excludes investments in tobacco, “controversial” weapons and nuclear weapons. Chief investment officer David Beattie says its approach to responsible investment relies primarily on negative screening. Some positive screening is done, mainly on governance issues, he says.
In addition to its default fund, Mr Beattie says Booster runs two separate socially responsible investment funds that exclude a broader range of activities, including direct investment in alcohol production, gambling, nuclear power and uranium mining.
Other providers also offer separate responsible investment options. Bad press about investment in land mines and cluster bombs has sparked others to announce they’re revamping their offerings. We’ll be taking a closer look at these funds when they’re launched.
Companies seen to be doing a better job at keeping their customers informed are more likely to be rated highly by their customers.
Of the 9 major providers in our survey, BNZ and Fisher Funds had the highest satisfaction ratings. Overall, 68% of BNZ customers and 63% of Fisher Funds’ were very satisfied with their provider.*
|Fisher Funds (57)||63%|
|Kiwi Wealth (117)||52%|
BNZ customers were more likely to be happy with the scheme’s general customer service while Fisher Funds’ customers rated it highly for keeping them up to date. Kiwi Wealth also rated above average on this measure.
At the other end of the table, only 27% of AMP customers were very satisfied with their provider.
The company also rated lowest for keeping its customers informed. Just 35% of KiwiSavers with AMP were very satisfied they were kept up to date.
It’s the second year AMP has rated below average in our satisfaction survey. In 2016, it managed a score of 32%. It’s dropped further this year and retained its place at the bottom of the table.
Half of AMP customers were also unsure whether their money was ethically invested. But it wasn’t alone on this measure. Across all funds, including the top scorers, between 30 and 51% of customers weren’t sure their retirement savings were invested responsibly.
*Ratings are for providers that had 30 or more responses in our survey.
|Company[width=50%]||Unsure[width=10%]||Very satisfied[width=10%]||Somewhat satisfied[width=10%]||Neutral[width=10%]||Dissatisfied[width=10%]|
|Fisher Funds (57)||44%||29%||14%||11%||3%|
|Kiwi Wealth (117)||31%||42%||16%||11%||0%|
GUIDE TO THE GRAPHS OUR DATA are from a nationally representative survey of 1085 New Zealanders, aged 18 years and older, carried out online in February 2017. Satisfaction ratings show the proportion of respondents who scored their provider 8, 9 or 10 on a scale from 0 (very dissatisfied) to 10 (very satisfied). Figures may add to +/- 100% due to rounding. The margin of error is +/- 3.00%.
You can compare KiwiSaver funds’ fees and returns at fundfinder.sorted.org.nz. The site is operated by the Commission for Financial Capability.
In August 2016, Radio NZ reported default KiwiSaver funds run by AMP, ANZ, ASB, Grosvenor (now Booster) and Westpac had money in global tracking funds that invested in anti-personnel mine manufacturers. AMP, ASB, BNZ, Grosvenor and Westpac were also reported to have money invested through these funds in cluster bomb manufacturers.
New Zealand’s obligations under international weapons conventions mean investment in these sectors is ruled out by both ACC and the New Zealand Superannuation Fund. The media spotlight on KiwiSaver providers led to the default funds announcing they’d ditch their investments in these areas.
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