Satisfaction ratings drop as fees hit a new high.
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.
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.
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.
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.
|Industry||% concerned about investment in industry[bar]||% unsure if funds are invested in industry[bar]|
|Oil and gas exploration||47%||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.
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:
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.