The Financial Markets Authority (FMA) has said it will be monitoring those costs and that they should be moderate - unless too many providers try to trade at the same time.

On Wednesday last week, the move to switch about 233,000 KiwiSaver default fund members to new providers got underway.

Of the six default providers, Kiwi Wealth, Booster, the BNZ and Smartshares have signalled they would be recovering costs from their members while the Westpac and Simplicity KiwiSaver schemes will be covering the costs themselves.

Kiwi Wealth said it would be charging the buy spread, for both its current default members and incoming default members, which will be around 0.12%.

Booster said it has "...minimised the costs involved as much as possible for members by synergising and netting any changes across all the other portfolios under management, including non-KiwiSaver funds".

"The actual figure is not yet known but will be approximately $0.05 for every $100 a member has invested."

Smartshares said it would charge an administration fee to members investing outside of the default fund and the costs of switching would be covered by the members moving into the default fund.

"We expect any costs will be outweighed by the extra savings members will receive from being a member of what is currently the lowest-priced KiwiSaver default fund," it said.

The BNZ said its scheme does have buy/sell spreads in place and members purchasing or selling units in a fund will incur a spread cost.

The buy spread for the BNZ KiwiSaver Scheme Default Fund is 0.0860% and for default members switching from its conservative fund to the default fund, it will be around 0.065%.

The FMA says it has told providers that "shifting" members must bear the cost unless providers bear the cost themselves.

"This is because members who have made an active choice should not be impacted by costs arising from shifting members who have not made an active choice."

It says some providers use mechanisms – like spreads – to ensure members in funds are not affected by members moving in or out of those funds.

"It’s business as usual for these providers to ensure that only shifting members bear the cost."

For providers without such mechanisms, the FMA has told them they must - estimate the cost, communicate that cost to members and report back on what the actual cost was.

Three outgoing providers, ANZ, ASB, and Fisher Funds, have decided they will meet the cost of the transition from their bottom line.

They will do this by reimbursing the funds the default members are transferred out of and because ANZ and ASB are the two largest providers, this will also reduce the overall cost of the transition.

The FMA says a long transition window will help minimise costs which will allow providers to space out their transfers and reduce costs for members.

"Providers are required to act in the best interests of their members throughout this process. The FMA will be closely monitoring this."