A non-Morgan fan writes

by Linda Sanders / 04 April, 2013
What to do if you want to change KiwiSaver schemes.
Getty Images/Listener photo illustration

Having joined Kiwibank’s KiwiSaver scheme, reader Christine Wetherell writes that she is horrified to hear that Gareth Morgan, who sold his KiwiSaver fund to the bank, is now a director of the company that runs her scheme.

“I am not a Gareth Morgan fan and feel it’s time I moved on but have no idea which KiwiSaver provider to move to. Can you tell me where I can get unbiased opinions on what my options are? My first choice was based on Kiwibank being 100% New Zealand-owned.”

Her question has broader application as people want to change providers for various reasons.

The kiwisaver.govt.nz website lists all the KiwiSaver funds with links to their websites. The site also aids decisions about the level of risk and other factors that may be important. Consumer.org.nz also has a good KiwiSaver section with comparative information on providers.

About 30 companies offer KiwiSaver funds, with risk profiles ranging from conservative to aggressive. The choice includes the other big banks, all Australian-owned, and insurance companies, such as AMP, none of which are fully New Zealand-owned.

The likes of Fisher, Forsyth Barr and Milford are investment specialists, mostly privately owned by their management or associates. There are also some niche funds not open to the general public. As an alternative to KiwiBank, Wetherell might consider SBS, a former building society, now a bank, owned by its customers. But she needs to do her homework first.

It’s worth looking at the research done on KiwiSaver. For example, FundSource’s website compares the performance of funds and has a list of questions you should ask your financial adviser that you could also apply to a potential KiwiSaver manager.

Before changing, she should consider her tolerance for risk and the performance of her preferred funds. A key factor to remember is managers currently top of the pile won’t necessarily stay there. Past performance is no indicator of what’ll happen in the future.

If you want to change your scheme, you must apply to the provider of the scheme you want to join – pretty much in the same way as if you were changing your phone or power supplier. Your new provider will arrange the transfer, but you may be charged a transfer fee by your old scheme, so check this.

With more than 400,000 people pre-registering to buy shares in Mighty River Power, there’s no shortage of takers, despite strict rules about who can register. Unfortunately for reader Rhona Bell, one rule is that buyers must be in the country.

“My husband is a New Zealander, I am a permanent resident and from all the Government information we presumed we would qualify to buy shares,” Bell writes. “We are going to Europe at the end of this month for four months and have been informed by two different sources that we will not qualify to buy Mighty River Power shares because we will not be in the country when the shares are available. Can you please confirm whether this is the case. If it is, it makes a mockery of the Government propaganda that all Kiwis will be able to be part of the share float.”

A check with the sale managers confirms this information. “Unfortunately, the position is as your correspondent notes – you have to be present in New Zealand to participate.

“The share offer will be made in New Zealand pursuant to New Zealand’s securities laws. Because of the nature of international securities laws, extending the share offer to New Zealanders in other countries would require the offer to comply with the securities laws of those other countries (even though the recipients are New Zealanders). Although we appreciate that New Zealanders overseas may want to participate in the share offer, the cost of allowing that participation would be significant.”

Of course, there’s nothing to stop you getting someone to buy on your behalf and transferring them later on.

Send questions to: money@listener.co.nz
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