KiwiSaver satisfaction survey

Satisfaction ratings drop as fees hit a new high.

KiwiSaver satisfaction survey

It’s been a bumpy 12 months for many KiwiSaver funds as sharemarket wobbles have cut into returns. But it hasn’t been a bad year for KiwiSaver fund managers. For the job of looking after our retirement savings, they charged us an impressive $415 million in fees last year, up 19% on 2017.

While consumers are paying more, they’re less satisfied with the service they’re getting. Almost all the 13 KiwiSaver providers in our latest survey saw their customer satisfaction ratings fall. Overall, 48% of KiwiSavers were happy with the service they were getting, down from 52% in 2018.

Satisfaction scores

AMP, ANZ and ASB – three of the biggest KiwiSaver schemes and default providers – all recorded below-average satisfaction scores.

Just 36% of ASB customers were very satisfied with the service they were getting.

AMP and ANZ didn’t rate much better, scoring 37% and 41% respectively.

Only one of the big KiwiSaver players, Westpac, managed an increase in its customer satisfaction score. Sixty-six percent of its customers were happy with the service they were getting, up from 59% last year.

However, it wasn’t all good news for Westpac. It rated below average for keeping customers up-to-date about their investments. Just 36% scored it highly on this measure.

Milford was the only other company to get an overall customer satisfaction score above 60%. Last year, Milford topped our table with a score of 80%. This year, it sits on 66%.

BNZ couldn’t repeat its 2018 performance. Its customer satisfaction score dropped from 71% to 57%.

To view satisfaction scores for all 13 providers, see Provider ratings.

Information deficit

This year’s fall in customer satisfaction is likely to reflect – at least to some extent – the volatile 12 months many KiwiSaver funds have experienced.

However, the quality of information consumers get about their KiwiSaver funds also plays a big part in satisfaction ratings.

Just 45% of KiwiSaver members thought their provider did a good job of keeping them up-to-date about their investment.

A sizeable majority (75%) didn’t know what they paid in fees each year and 66% were unsure how their fund was doing relative to the rest of the market. One in four KiwiSavers were also unsure about what type of fund their money was invested in.

Survey results show many find it difficult comparing providers and funds. Forty-six percent felt they didn’t have access to sufficient independent information and advice to help make decisions about their investment, or didn’t know what was available.

Four out of 10 were also unsure about whether their KiwiSaver kitty would be enough to support them in their golden years. Just 16% felt very confident their KiwiSaver funds would be adequate for their retirement.

Ethics questions

KiwiSavers face another big information gap – knowing whether their money is invested ethically.

Most consumers said they wanted more than good returns: six out of 10 wanted to know their money was invested responsibly. Fourteen percent were prepared to accept slightly lower returns, as long as they were confident their KiwiSaver cash was being invested in the right places.

As we found in 2018, the majority said they’d be concerned if their cash was put into “sin stocks”, such as gambling, pornography or tobacco (see our graph). However, most didn’t know if their fund manager excluded investment in these industries.

Just 23% were content their savings were being invested responsibly.

Consumers looking for responsible investment options aren’t spoilt for choice. To date, industry efforts have been largely limited to excluding investment in pariah stocks, such as tobacco and whaling.

Most big players now exclude direct investment in tobacco. A few have also adopted the New Zealand Super Fund’s blacklist of companies excluded from investment for human rights abuses, poor environmental practices or other ethical concerns.

Just five KiwiSaver providers offer funds promoted as dedicated responsible investment options. These funds exclude a wider range of investments such as alcohol, arms, gambling and pornography.

But sustainability investing – where money is directed towards “green” industries – remains hard to find and there’s been little change since our 2018 review.

Getting the industry to provide responsible investment options is likely to take both consumer pressure and tougher disclosure obligations that require KiwiSaver providers to cough up better information about where funds are invested.

Where do you stand?

Industry % concerned about investment in industry[bar] % unsure if funds are invested in industry[bar]
Pornography 74% 61%
Weapons 74% 63%
Gambling 72% 65%
Tobacco 68% 66%
Nuclear power 62% 67%
Uranium mining 60% 68%
Alcohol 54% 69%
Oil and gas exploration 47% 72%
Fast food 46% 72%

GUIDE OUR DATA are from a nationally representative survey of 2072 New Zealanders, aged 18 and over, carried out in February 2019. Figures may add to +/-100% due to rounding.

Where's your money going?

Finding out which horses your KiwiSaver cash is backing isn’t as straightforward as it could be.

KiwiSaver providers must regularly disclose the top 10 investments of each of their funds. They also have to file financial statements and lists of fund holdings showing where money is invested. These returns are held on the Companies Office Disclose Register. But in many cases, the information doesn’t tell you everything you need to know. Most schemes invest in global tracking funds, which means you need to dig deeper to find where these funds invest.

It’s a safe bet the majority will have holdings in stock exchange leaders and big name companies – think Apple, Microsoft, Facebook, BP, ExxonMobil, Shell, Nestle, Coca-Cola, PepsiCo and McDonald’s among others.

The online Disclose Register is free to access, although you need to know where to look for relevant information. To find your KiwiSaver fund’s holdings, search under “Offers” and enter the name of your provider. A list of “Full portfolio holdings” can be found under the “Investment Options” tab.

You’re entitled to ask your provider where it’s investing your money. Quiz your fund manager about its approach to responsible investment. Look for details on industries the fund screens, rather than general commitments to do the right thing. You can also ask what the fund is doing to support sustainability investing.

Six KiwiSaver funds are promoted as dedicated responsible investment options:

  • AMP’s Responsible Investment Balanced Fund
  • ANZ’s OneAnswer Sustainable International Share Fund
  • Booster’s Socially Responsible Investment Balanced Fund, and Socially Responsible Investment Growth Fund
  • QuayStreet’s Balanced SRI Fund
  • SuperLife’s Ethica Fund.

These funds exclude a broader range of investments than the companies’ other KiwiSaver offerings. Common exclusions include alcohol, arms, gambling and pornography. Investment in fossil fuel extraction is also excluded by Booster, QuayStreet and SuperLife.

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Member comments

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Sanjay J.
09 Jul 2019
Default?

Does the term default means failure of the provider to pay or does it mean default provider by an employer

Consumer staff
11 Jul 2019
Re: Default?

Hi Sanjay

When we use the term “default”, we’re referring to the nine government-appointed default KiwiSaver providers.

KiwiSaver members who don’t pick a provider will be allocated to one of these default providers.

I hope that answers your question.

Natalie - Consumer NZ staff.

Steve K.
01 May 2019
Kiwisaver Balanced Returns

Interesting to read that satisfaction was low when its funds returns were at the higher end (2nd highest over 5y in Balanced I think). I wonder what people are dissatisfied with.

David C.
18 Apr 2019
Fees and satisfaction

We can't control market returns, but we can control the fees we pay and development of low-fee companies like Simplicity offer hope with that.

However, it's disconcerting that people continue to pay such high fees when low-cost index-tracking funds are available - and at the moment are outperforming many of the costly managed funds.

A little disappointed Simplicity didn't show up in the satisfaction survey because of a lack of responses.

J S.
27 Apr 2019
simplicity

I joined Simplicity from ANZ and never looked back I like the communication and low fees . His intelligent compassionate thinking appeals to me . But mostly my Kiwisaver account grew impressively due to the lower fees.

Elizabeth R.
13 Apr 2019
After saving

I've now started drawing down on what I'd saved in my ASB moderate fund. I also changed 1/2 of my fund to conservative shortly after reaching 65. I'm truly impressed with the fund management. A drawdown of $500 in a month is often replaced by the fund's performance before the next month! I've had a few lump sum withdrawals: new car, some home repairs; but the fund is holding up well.

Bob S.
27 Mar 2019
Fees argument

Why no reply to Jon-Paul H. comment 6/10/18 on Kiwisaver fees. Makes sense to me and goes against the general argument thats put up by Sorted and even in the consumer article. Which is basically that the lower the fees the better the fund.

Jon-Paul H.
06 Oct 2018
Focus on fees

While this article is helpful it doesn't unpack the fees discussion that is somewhat misleading.

If you are in a defensive or conservative fund, fees are a significant consideration as these funds are not typically great performers as the focus is on capital stability. So fees need to be low to ensure returns maintain value as much as possible. The second half is these funds typically sit in lower maintenance asset classes so they should have lower fees.

Now you would be in a defensive or conservative fund if you were looking to access the money in the short to possibly medium term, retirement or buying your first home.

The rest should be in balanced to growth assets as they need to be making money and not just saving it. And this is where the fees discussion is potentially harming people.

By choosing a fund on low fees you are potentially limiting your growth returns. It is the nett after fees return that really matters to you. If a fund is charging 5% fees and consistently returning 20% before and 15% after fees vs the one charging 1% fees and returning 10% before and 9% after fees, by selecting the low fee option you're muting your investment return by 6%, which compounded over 20-30 years makes one hell of a difference.

The reality is it is more likely to be 1% vs. 2 % and the difference in after fee returns are 1-5%, however, this compounded over a long period of time also has a significant impact. Long story short, seeking advice and not doing this yourself is the best way to get what you need from your KiwiSaver.

Yes, I am an adviser and I see poor choices from lack of understanding every day.

The key to KiwiSaver is:
Choose the right fund for you
Make sure you're contributing above the minimum for the free money with member tax credits
Make sure you have the right tax rate set.
And getting specific advice on making this happen is strongly recommended.

David C.
18 Apr 2019
Low fee funds

Low fee funds are attractive because while we can't control the markets, we can control the fees we pay and that can make a real difference in returns in the long run - and super investment is definitely for the long run

Performance of individual funds, relative to other funds, varies with time. Given the numbers I've seen, from firms like Vanguard and independent analysts, say the majority of managed funds don't do as well as index trackers that charge a lot less, why would I go with a managed fund? That's also visible in the performance figures Consumer have published.

Picking the right type of fund, with an appropriate level of volatility, for your life stage is probably the more complex choice to make.

Joshua P.
16 Jun 2018
Simplicity.kiwi

Simplicity seemed like a no brainer. They have low fees, give money to charity, and recently they’ve committed to a more ethical portfolio. I went with their growth fund and returns seem pretty decent.

Kubi W.
27 Apr 2019
Simplicity-simply outstanding

Simplicity provides great returns, charges low fees and is socially responsible.
I wouldn’t put my money anywhere else.

Bryce M.
12 May 2018
No Simplicity

I didn't catch how the providers were selected. Could you elaborate please?

Consumer staff
14 May 2018
Re: No Simplicity

Hi Bryce,

We haven't included Simplicity because we didn't receive enough responses for them in our survey. Ratings are for providers that had 30 or more responses.

Cheers,
Fonda - Consumer NZ staff

Ross M.
13 May 2017
Ethical investing or legal investing?

To assume that any old investment will give you the same return over time is not correct. The alternative to investing in large firms that have divisions making so-called "unethical" products may well be suffering reduced investment returns. Some people may be OK with that, but others will not. Also, lumping several issues together under the heading "ethical" is inappropriate because we all have differing views on different issues. So kudos to Consumer for showing the variation of opinions on issues from weapons manufacture to alcohol production. But you need to ask if people would still invest in an "ethical" fund if the return after tax and fees was, say, 1% per year lower than for a fund that invested in any legal investment.

Megan Holland
13 May 2018
Comment to the last sentence above

Yes, unfortunately there would be those people that would still not have a problem if an investment was unethical. Of course what is considered unethical by one person may not be considered unethical by another person.