The Green Party is proposing to boost the value of KiwiSavers' retirement nest egg by creating a 'public option' provider that will give savers tens of thousands of dollars in fee savings over the lifetime of their investment.
A significant part of New Zealanders' savings get eaten away by costs and fees. By offering a public KiwiSaver option, we can lower costs sizably, saving tens of thousands of dollars.
The Savings Working Group estimates that a single large provider can reduce the costs of KiwiSaver by a factor of two-to-three. A 40 percent saving in costs and fees over the lifetime of a typical KiwiSaver account will result in a bigger nest egg on retirement of anywhere from $23,000 to $142,000.
The fund will be managed by the Guardians of the $16 billion New Zealand Superannuation Fund while Kiwibank or the Inland Revenue Department can provide the front-end management of individual KiwiSaver accounts."
The recommendation for a single default provider was made by the Government-appointed Savings Working Group in January of this year. The Australian Government announced similar but more sweeping changes to their superannuation industry in September this year.
Like Kiwibank, the public fund will be New Zealand owned, managed in an arms-length, commercial way, in the interests of the New Zealand economy.
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