FirstChoice KiwiSaver Scheme fee changes announced

ASB Group Investments has announced that it is changing the fee structure for its five index-tracking funds under the FirstChoice KiwiSaver Scheme. This follows the recently announced changes to the ASB KiwiSaver Scheme fees.

“ASB Group Investments has undertaken a review of both of the ASB KiwiSaver Scheme and FirstChoice KiwiSaver Scheme over the past few months. As a result of this review we are introducing a transparent two-tier fee structure for the FirstChoice KiwiSaver Scheme. The changes will take effect from 1 April 2011,” says Catherine McGrath, ASB Chief Executive Customers, Markets and Products.

The change means that from 1 April 2011, those members investing in the FirstChoice KiwiSaver Scheme’s five index tracking or “passive” funds will pay an unchanged annual administration fee of $36, plus an annual investment management fee at a new range of between 0.35 percent per annum and 0.70 percent per annum.

FirstChoice KiwiSaver Scheme members investing in the five actively managed funds will see no change to their administration fee or to the rate of their investment management fee.

However, the new two-tier fee structure will apply to both the index-tracking and active funds and will see the investment management fees being deducted monthly from the member’s account, as is currently the case with the administration fee. This means that all fees charged will be clearly visible and understood, and the Trustee fees and other costs currently charged to the funds before the investors are paid their returns will be absorbed within the investment management fee.

“We are not changing the investment management fee for our actively managed FirstChoice KiwiSaver Scheme funds, as we consider that they already fairly represent the costs of managing those funds,” Ms McGrath says.

The new fees have been developed to better reflect the scheme’s actual operating costs, and provide ASB Group Investments with a fair return for the management services it provides.

ASB Group Investments is writing to every FirstChoice KiwiSaver Scheme investor to explain the new fee structure, and provide a comparison of the fees they pay now compared to those they would pay in 2011 under both the new and old fee structure, based on the same account balance.