AMP have announced that they are merging the AMP and AXA KiwiSaver schemes and giving up the dual de
fault provider status that they have held since the AMP buyout of AXA in 2011.
If a person joins KiwiSaver and doesn't elect a fund manager, they are automatically allocated to a 'default' provider. There have been six default providers since the launch of KiwiSaver on 1st July 2007 and new members are allocated on a roulette system - 1 to ASB. 1 to AMP, 1 to AXA, 1 to Mercer, 1 to OnePath, 1 to Tower, and then the roulette starts all over again.
Since AMP has owned AXA, two out of every six new 'unallocated' members to KiwiSaver have been sent to AMP KiwiSaver default schemes. But - no more! From 22 February, the AXA KiwiSaver scheme is closed to new members - and that includes default KiwiSavers - after the 90 day 'holding' period with IRD.
When AMP merges the scheme, it appears that it will look more like the existing AXA multi-manager scheme. AMP has more than 260,000 KiwiSaver Scheme customers across its two KiwiSaver Schemes and 18% of KiwiSaver funds under management.
Good news for Westpac - who has publicly commented that they want to be a default provider after the review of KiwiSaver default providers due by June 2014.
However, with over 2 million people already in KiwiSaver, and the rate of additions slowing (13,718 new members on average over the last 7 months, as compared to an average of 32,774 new members each month for the previous 5 years), it has to be queried how valuable a default provider status is going forward - compared to from launch date.
Yes, 50% of those new members in the last 7 months went into the default funds (didn't have an active choice), and yes, if KiwiSaver is made compulsory being a default provider will have some cachet.
The interesting thing to watch is how the non default providers cope under the new FMA guidelines for promoting (read aggressively selling) KiwiSaver to their clients which come into play this week (March 1st).
For more information - refer to these articles
Other blog articles that you might be interested in:
FMA tightening KiwiSaver monitoring
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By Peter Church