The Australian-based SuperRatings research house says that substantial improvements have been made over the past year in terms of member engagement and servicing, but chief executive Adam Gee says that "the race to the bottom on fees remains particularly concerning."

Using it's unique 'value for money' assessment, SuperRatings has analysed over twenty-five KiwiSaver schemes in the five years to March 2016 and found that there is often an inverse relationship between fees and investment outcomes achieved by members. In short, those funds with the lowest fees will often provide lower investment returns than their higher fee counterparts.

“All participants within the KiwiSaver market, including regulators, providers and advisers should ensure that the key measure of the industry’s success should be the net after fee and tax outcome, rather than a race to the bottom on fees, which will benefit very few over the longer-term” says Gee.

As GM Investor Education at the Commission for Financial Capability, David Boyle welcomes the fees debate at a time when KiwiSaver balances are growing and members are looking for greater transparency about their real costs - and whether they are getting value for money.

Like SuperRatings, Boyle says the most important thing is the return after fees and if people make investment decisions based solely on fees "that would not be a good outcome."

While one recent KiwiSaver entrant has adopted a low fees model, Boyle disputes whether there is any race to the bottom, "because that would mean that everyone would be chasing it, and that's not the case."

Indeed, he says that New Zealanders have a wide range of choice in terms of management style and fees and the industry focus should be on how to improve financial outcomes for KiwiSaver members. "It could mean higher returns but lower fees somewhere down the line as balances grow and as KiwiSaver funds grow."

The Fisher Funds Two KiwiSaver Scheme was among seven top-rated 'Platinum' schemes in the SuperRatings survey and managing director Carmel Fisher says that extrapolating the lost returns from low fee schemes over longer periods of time could mean the difference between an okay retirement and an absolutely wonderful one.

"In some products and services, cheaper is definitely better. But, for the important things in life, I'm prepared to pay more in order to get the best on offer" Fisher says. "I'm thinking my retirement lifestyle fits in that category."