FMA details methods KiwiSaver managers can use to show fees charged
The Financial Markets Authority will allow KiwiSaver fund managers to use one of two methods to show how much they are charging people to manage their funds.
As part of new regulations requiring KiwiSaver managers to disclose fees in dollar values for investors, the FMA will allow them to use the investor's balance at the date the units of the fund are valued, known as the cents per unit (CPU) method, or another method based on the investor's average balance or the total annual fund charge (TAFC) method. The FMA said both methods will give investors the information they need, which is the fees they pay in dollars.
"By setting out fees in dollar terms, we believe KiwiSaver members can more clearly understand how much they are paying their provider every year," said FMA director of regulation Liam Mason. "We hope that seeing the actual dollar amounts being paid in fees will prompt more KiwiSaver members to think about value for money from their KiwiSaver."
The FMA wants KiwiSaver members to compare the fees they are paying with those of other providers.
The regulator would like to see fund managers disclose total fees as a percentage of the KiwiSaver members balance as well as fees in dollar terms.
"By showing the percentage value alongside the dollar value members can compare their fees over time, year on year," the regulator said.
The FMA is seeking feedback on wording for the methodology notice, in the expectation the dollar values of fees will be included for individual KiwiSaver annual statements by March 2018. The use of the CPU and TAFC methods will be reviewed within five years, it said.