Ushering in the new era of KiwiSaver default providers
Actions taken following the Government’s seven-yearly review of default KiwiSaver providers will have implications for outgoing, incoming and ongoing default providers. Impacts will also be felt by other parts of the sector; where approximately 276,000 default members and $3.39 billion (as at 31 March 2021) are subject to involuntary transfers from early December.
Default providers and regulators are having ongoing discussions on the transition process, in order to ensure the best outcome for members.
There are a several key dates, and directives, that default providers will need to keep in mind over the coming months. Most notably:
All default providers will have to provide hard copies of the Product Disclosure Statements (PDS) to Inland Revenue (IR) for new members by 14 September.
New auto enrolments will start to be allocated to the new set of default providers from 28 September.
Bulk PDS will have to be supplied by incoming and continuing default providers to IR for customers being transferred by 22 November.
New non-active choice customers will be sent through to the new set of default providers from 1 December.
Involuntary transfers of existing default members will be initiated on 4 – 5 December. This is expected to be completed by 4 February.
Member notifications will take place on 6 December, accompanied by PDS, and possibly supported by a social media advertising campaign.
Between now and December, the FMA will be monitoring the number of members who move from being default to active choice within their current default provider, relative to that provider’s usual conversion rates. Providers were required to update the FMA on these numbers every quarter; they now have to update them monthly. After 30 September, any active choice campaigns will have to cease. As before, investments in fossil fuels are not permitted.
We will update you on the required reporting cycles after December 2021 in the next edition of this newsletter.