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ASB KiwiSaver Scheme Fee Structure Overhauled

Fuseworks Media
Fuseworks Media
ASB KiwiSaver Scheme Fee Structure Overhauled

 A new competitively priced two-tier fee structure is being introduced  The average ASB KiwiSaver Scheme Conservative Fund customer will pay 24 cents more in fees next year  Direct deductions from members' accounts will make fees more transparent ASB Group Investments is overhauling the way it charges fees on its ASB KiwiSaver Scheme with a new two tier fee structure to be introduced from 1 April next year.

The new fee structure will better reflect the scheme's actual operating costs, and investors will be able to see exactly how much they are paying in fees.

"From 1 April 2011 all ASB KiwiSaver Scheme investors will pay an annual administration fee which is unchanged at $30 plus an annual investment management fee ranging from 0.35 percent per annum for the Conservative Fund up to 0.70 percent per annum for the Growth Fund, based on the balance of funds in their account," says ASB Chief Executive Relationship Banking, Stewart McRobie.

"This means a customer with the average KiwiSaver balance of around $4,800, invested in the ASB KiwiSaver Scheme's largest fund, the Conservative Fund, would pay a total of $49.20 in fees next year, an increase of 24 cents. A customer with $10,000 invested would pay $70 in fees next year, which is 50 cents more."

"For the majority of investors the increased fee impact will be less than $5, and ASB KiwiSaver Scheme's fees will continue to be amongst the lowest of the major KiwiSaver providers. For the ASB KiwiSaver Scheme Conservative Fund - which is a default KiwiSaver fund - the fees remain the lowest of all of the default providers."

"The highest increase anyone with $10,000 invested in any fund will pay will be $21 next year. This would be for an investor in the Growth Fund."

Mr McRobie says the fee changes are based on ASB Group Investment's three-year experience of the costs of operating the Scheme.

"The way KiwiSaver works has evolved considerably since it was first developed. Ongoing Scheme changes, such as the introduction of member tax credits and compulsory employer contributions, have major technology implications and are costly to implement. KiwiSaver has changed considerably during its history, requiring further technology development and increased communications to members."

"The new fees will better reflect the scheme's actual operating costs, and provide ASB Group Investments with a fair return for the management services it provides. Even so, ASB Group Investments is still not expected to break even on providing the ASB KiwiSaver Scheme until 2015."

"ASB Group Investments will also become the first of the major KiwiSaver providers to deduct fees directly from each investor's account, rather than the common industry practice of deducting most fees from the investment fund prior to returns being credited to investors."

"Direct deductions are more transparent and will clearly show each investor what they are personally paying in fees."

The new two-tier fee structure means that all fees charged will be clearly visible and understood - the Trustee fees and other costs currently charged directly to the fund will be absorbed within the investment management fee.

ASB Group Investments is writing to every ASB KiwiSaver Scheme investor to explain the new fee structure, and provide a comparison of their fees in 2010 to those they would pay in 2011 based on the same KiwiSaver account balance. Investors will receive the scheme's annual report at the same time. Information on the new fee structure can also be found in the ASB KiwiSaver Scheme Investment Statement.

ASB Group Investments is also conducting a review of the FirstChoice KiwiSaver Scheme fee structure. If any changes are made investors will be notified in writing and the Prospectus and Investment Statement would be amended.

There are more than 250,000 investors in the ASB KiwiSaver Scheme, with 150,000 of those in the Conservative Fund. Under its two KiwiSaver schemes, ASB Group Investments manages funds on behalf of around 265,000 investors.

The Government Actuary has approved the default fund fee changes and has also been advised of the changes for the other four ASB KiwiSaver Scheme funds. The Trustee, Public Trust, has also approved the changes.

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