Kiwisaver and NZ QROPS landscape changing

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Mergers and acquisitions changing the shape of Kiwisaver Qualifying Recognised Overseas Pension Schemes are under way.

The New Zealand Financial Markets Authority has greenlighted the merger of two of the largest Kiwisaver providers in a NZ$2.5 billion fund that will rank as third largest in the country.

AMP Financial Services has won the go ahead to switch AMP Wealth KiwiSaver members to a single AMP scheme. Many of the retirement savers are former AXA customers.

The combined Kiwisaver will have more than 260,000 members and a 16% market share after the switch.

To gain the official nod of approval AMP had to review the funds to ensure former AXA customers were not at a financial disadvantage and not paying extra fees.

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Funds growing

Australian financial research firm Plan for Life revealed KiwiSaver funds under management have increased to NZ$16.9 billion from NZ$16.45 billion in the previous quarter.

The fastest growing providers are Aon and Fisher Funds, while AMP, Fidelity Life and Tower were lagging in growth. These three funds are all going through mergers. All five firms have Kiwisaver plans registered as QROPS.

Meanwhile, British pension regulators may seek more cash from the collapsed Guinness Peat Group, which is in liquidation.

The company has already informed shareholders that £124 million will be set aside to cover pension liabilities in the UK, but now, the regulator has warned more money might be ring-fenced.

That’s because the cash may be needed to cover pensions of subsidiary companies.

The regulator is already considering the move for GPG’s Coats Pension Plan and Brunel Holdings Pensions Scheme and has indicated that a third pension scheme may also be included – Staveley Industries Retirement Benefits Scheme.

Pensions investigation

In a statement to the New Zealand Stock Exchange, GPG announced the regulator’s intentions and commented the move was reasonable.

However, setting aside more cash is not winning favour with shareholders and the firm’s creditors who are likely to see their returns diminish if more money is earmarked to protect UK pension payments.

However, the company has suggested putting aside further funds would be unreasonable.

GPG wants to reinvent as threadmaker Coats in the UK, but feels the ongoing pension investigation is holding back their plans.

“Pension investigation move slowly and the procedures will take several months and could even run into years,” the firms has told investors. “This could put plans to dispose of assets on hold as they are effectively frozen during the investigation.”

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