In short, absolutely nothing!
Whilst a number of changes are due to take place from the 1st December 2021, do bear in mind that these will only apply to those individuals who are in a default KiwiSaver scheme (i.e. one chosen by the IRD). Every seven years the Government reviews the settings for default providers ahead of appointing a new set of default providers through a competitive tender process.
If you are not in a Default KiwiSaver scheme, none of this will apply to you
What are the Changes to the Default Schemes
Firstly, the number of default KiwiSaver providers will reduce from nine to six, and those default schemes will be unable to invest in fossil fuels.
The other big change to occur is that all KiwiSaver default funds will be invested in a ‘balanced' fund rather that a 'conservative' fund. This particularly is long overdue and we were actually one of eight adviser companies back in July 2018 who lobbied the FMA and the Reserve Bank of New Zealand for this change to be made as we calculated that default members had lost over $1bn over the previous five years because they were in a low risk conservative fund.
The default providers going forward will be BNZ, Simplicity, Booster, BT Funds Management (Westpac), KiwiWealth and SmartShares. Certainly, ANZ and ASB will feel particularly hard done by as they lost their status as a default provider, as did Fisher Funds.
What's the Reason Behind these Changes?
The Government seems to be putting NZ providers at the heart of their default KiwiSaver recommendations. BNZ and Westpac (through BT Funds Management) retain their status – I guess Westpac were never going to be kicked off given that they have been used by the New Zealand Government as its banker since 1989.
What do I do if I am with a Default provider that is being removed?
If you are an active (non default) member of either the ANZ, ASB or the Fisher Funds KiwiSaver, then you shouldn’t be looking to change provider purely because they are due to lose their default status. This just means that they perhaps didn’t fit in to the Government’s criteria this time around but they do still offer consistent performance with solid fund management.
Of course those providers that will lose their default status from December 2021 remain committed to the KiwiSaver market so these changes will not affect any of us who have picked them to be our chosen KiwiSaver provider.
The key to this is advice so if you are at all worried about any or this or if you will be affected, let us know!