Suncorp-owned insurance company Asteron Life has announced it will withdraw from KiwiSaver to focus on its core business and it expects more KiwiSaver exits will follow.
Asteron, which has about $33 million of funds under management across 6200 KiwiSaver customers, flagged the possibility of a KiwiSaver exit in its most recent prospectus.
It is the third KiwiSaver provider to exit the scheme after EoSaver and the union fund IRIS.
And according to Asteron managing director Sean Carroll more providers are likely to give up on KiwiSaver in the near future.
He said the decision to leave has been driven by the fact that the KiwiSaver market is experiencing and requires further consolidation.
Three years after KiwiSaver was introduced there are now more than 50 KiwiSaver schemes but, Mr Carroll noted, seven of these providers cover 95% of the KiwiSaver market.
“The reality is that the opportunity for economic scale simply doesn’t exist for all suppliers, which has become increasingly clear as the market has matured and stabilised” Mr Carroll said.
“This means it makes sense for our KiwiSaver clients to transfer to a scheme provider that has the scale to focus substantial resources on growing and servicing that part of their business.
“We believe this is the beginning of a market trend for KiwiSaver providers.”
Martin Lewington, head of Mercer New Zealand, also expects to see significant consolidation in the KiwiSaver market with a number of smaller providers exiting over the next couple of years.
“I think people are finding out that KiwiSaver’s not as much of a cash cow as they thought it would be,” he told NBR recently.
As with all KiwiSaver exits, members now have to choose another scheme to transfer to; Asteron has recommended its clients look at the Grosvenor KiwiSaver scheme, which it said holds very similar funds to Asteron.
If Asteron KiwiSaver clients haven’t chosen a preferred scheme by May 31 the IRD will automatically allocate them to one of the six default schemes.
Niko Kloeten
Thu, 29 Apr 2010
