News Round Up: Nov 21

KiwiSaver funds under management are too small to achieve the economies of scale the Green Party says would result from the creation of a single default fund, claims the Investment Savings & Insurance Association (ISI).

The ISI has released a briefing note it says will help inform the debate around the future of KiwiSaver, citing Australian research on the effect of scale on fund fees.

“A recent study from Australia. . . would imply that such economy in administration costs has only been achieved there when funds under management in a single fund (with individual account holders) exceed A$10bn,” said the ISI.

“Total funds under management across all KiwiSaver providers is currently just over NZ$9bn, well below the point at which Australian funds appear to achieve economies of scale in administration costs.”