KiwiSaver competition picked up the pace during the 12 months to the end of March 2024 as scheme transfer amounts surged more than 20 per cent year-on-year, according to new figures from the Financial Markets Authority (FMA).
The FMA 2024 KiwiSaver annual report shows more than $3.9 billion flowed between rival providers over the financial year compared to about $3.2 billion in the previous year – an increase of 21 per cent: the number of members transferring rose 16 per cent from 132,180 last year to 154,249 in the 2024 period.
As the Investment News NZ annual KiwiSaver wrap-up published in August found, Milford Asset Management emerged as the stand-out winner in the transfer market with a net $1.1 billion gain from competing schemes over the most recent reporting year.
Meanwhile, Australian bank-owned schemes – ASB, ANZ and Westpac – saw combined net transfers outflows of $1.1 billion.
And the competitive heat continued to rise post balance date, too, according to just-published Inland Revenue Department (IRD) figures: almost 55,000 members have swapped schemes during the four months from April 1 including a 12-month record high of 15,239 in July.
The FMA report also highlights a notable spike in KiwiSaver transfers into Australian superannuation schemes as 4,150 members took almost $140 million between them across the Tasman.
In the 2023 reporting year, only 1,766 KiwiSaver members exported roughly $55 million into Australian super schemes as they fled the country.
The FMA report notes the total cost of KiwiSaver jumped close to 19 per cent year-on-year as fees and expenses hit almost $790 million compared to $664 million last year – closely tracking the annual 19.3 per cent gain ($24.3 billion) in funds under management “made up of investment returns ($13.1 billion) and contributions ($11.2 billion)”. John Horner, FMA director markets, investors and reporting, said in a release: “While we have seen a gradual decrease in fees as a percentage of funds under management over the last 10 years, this wasn’t continued in the 2024 data. As KiwiSaver grows, I expect to see the benefits that come with economies of scale shared with KiwiSaver members.”
Government also had a KiwiSaver windfall over the 2024 financial year with the tax haul of $590 million providing a significant offset to the $990 million spent on the sole remaining incentive.
While the fiscal cost of the member tax credit has remained steady for several years, however, the government take on investment returns varies: last year, for instance, KiwiSaver tax amounted to just $46 million following poor market returns.
If all eligible members had met the minimum annual personal contribution of $1,042.86 to receive the $521.43 top-up over the 2024 period, government costs would’ve been about $1.5 billion.
