Fuseworks Media

Simplicity cuts KiwiSaver fees for sixth time in six years

Simplicity, the nonprofit default KiwiSaver and investment fund manager, has cut fees for all of its KiwiSaver and diversified investment funds by 13.8%, from 0.29% to 0.25%, effective 1 February 2024.

The fee cut is Simplicity’s sixth in six years, and follows continued growth to over 147,000 members and $5.5 billion dollars of funds under management.

As a nonprofit, Simplicity aims to pass on the benefits of scale to members.

Simplicity Managing Director, Sam Stubbs, was highly critical of the level of KiwiSaver fees across the industry.

“KiwiSaver is a wonderful savings scheme,” he said. “But too many fund managers are getting fat on the fees ordinary New Zealanders pay,” he said.

The FMA KiwiSaver Annual Report 2023 shows industry fees for the year were $664.1 million.

“Managing a KiwiSaver scheme requires no regulatory capital, and has massive economies of scale. Very little of this gets passed on to members,” he said.

From 1 February 2024, Simplicity will charge management fees 0.25% per annum for all their KiwiSaver Funds.

In contrast, the Sorted website indicates that the current average fee charged for $10,000 invested in KiwiSaver is 1.21% per annum for growth funds, 1.03% for balanced funds and 0.90% for conservative funds.

“That gives you an idea of the gravy train of fees,” said Mr Stubbs.

“Imagine if a for-profit health insurer tried to charge four times what Southern Cross does? How long would they stay in business?” he asked.

“Yet that’s what’s happening with KiwiSaver every day, as fund managers cash in on the lack of awareness of ordinary New Zealanders saving for their retirement,” he said.

 

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