KiwiSaver: In wake of Aussie failure, what would happen here if a KiwiSaver provider failed?
'I think we've got a more effective regulatory regime. It's set up really well to protect KiwiSaver members and investors,' Callanan said.
There is always the risk that investments could go wrong, but KiwiSaver schemes do have some protections in place. Photo / Getty Images
He said the supervisor was 'effectively a trustee'.
'We're in place to ensure that KiwiSaver providers are doing the right thing for investors. If there was an issue with a KiwiSaver provider then the supervisor would be able to step in and take control back and come up with a solution.'
Callanan said that could involve appointing another manager if necessary.
'We have the power to step in and to take control back in the interests of those investors.'
He said that because there were a limited number of independent supervisors, they were closely regulated by the Financial Markets Authority.
'In Australia, there are hundreds of responsible entities who play that role.'
Callanan said if a fund manager was failing, it would not be able to access investor funds.
'That's another area that in those scenarios that I've seen in Australia hasn't worked. You've got fund managers just dipping into investor monies, you know, to go and buy a Lamborghini or whatever they feel like on a whim.
'That just couldn't happen here because we've got independent custodians and again, Public Trust is an independent custodian for a number of KiwiSaver providers, and that can give investors confidence.'
He said there was also a strong conflict-of-interest regime in place.
'Even for fund managers who might undertake what is called a related-party transaction ... the Financial Markets Conduct Act stipulates the process they have to go through to work with their supervisor to get that transaction across the line.'
But that does not mean you cannot lose money in KiwiSaver.
Callanan said there was always the risk that investments could go wrong and financial markets might not perform as expected.
'But if you're with a KiwiSaver provider in New Zealand, you can have confidence that there's a mechanism in place in the supervisors that if something was to go wrong with that manager, the supervisor would step in and stop you falling down the metaphorical cliff.
'There's always the possibility that someone makes a silly financial decision or you could pick an investment that's really bad. My advice would be to avoid a situation where you have all your eggs in one basket.'
He said that could only happen with the KiwiSaver schemes that allow people to choose their own investments.
'Most KiwiSaver providers are offering these diversified products and you can be really confident you've going to get a good outcome because you've spread your risk in an appropriate way.'
Financial Markets Authority (FMA) director of markets, investors and reporting John Horner said the law prescribed the segregation of duties in relation to managed investment schemes.
'Generally, while the manager of the scheme is responsible for investment decisions, the custodian is responsible for holding and safeguarding the scheme property – segregation of legal ownership – and for keeping records of the scheme property – segregation of functions. Supervisors licensed by the FMA are responsible for custody. Depending on the scheme's governing documents, a supervisor may appoint another appropriate independent person as custodian.
'MIS [managed investment scheme] managers and supervisors are obliged to act with care, diligence and skill. MIS managers are expected to maintain strong capital positions, professional indemnity insurance, parent company guarantees or other, similar arrangements. Managers are also required to notify the supervisor if they are, or are likely to become, insolvent. The supervisor is responsible for monitoring the manager's performance of its functions and obligations, as well as its financial position.
'In the event that the fund manager becomes insolvent or is otherwise unable to continue operations, the supervisor has the power to appoint a temporary manager to ensure the continued management and operation of the fund until a permanent replacement is appointed.'
– RNZ
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
11 hours ago
- NZ Herald
Free rent, free bike – but would you move to East Germany?
Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech. Eastern block charm: Residential complexes in Eisenhuettenstadt. Photo / Getty Images Opinion Like many Europeans, you too have probably daydreamed about picturesque Italian villages where you can buy a house for just a couple of New Zealand dollars. Italian village authorities have been offering up properties for as little as one euro in order to keep their towns alive as youngsters move to big cities and the elderly have nobody to leave their rustic homes to. Facing the same sorts of issues, small towns in France and Croatia have launched similar schemes. And now the Germans are trying to get on the act, too. Well, sort of. In typical German style, it's not quite as wildly romantic as a one-euro shanty on a French mountainside. Instead, municipalities in rapidly depopulating former East Germany are promoting what they call Probewohnen, or 'trial residency'. Hundreds have applied for an apartment, at no or minimal cost, for several weeks. The idea is that they get a taste of life in the East and then potentially decide to stay. Goerlitz, a town on the border with Poland, has had a scheme like this in various forms since 2015. Other towns have caught on more recently. Last year Guben, population 16,000, started its own version – besides an apartment, the city will even give you a bicycle to get around on. Later this summer, Eisenhuettenstadt, population 24,000, will welcome its first trial residents. Other East German cities, including Frankfurt an der Oder, Wittenberge, Dessau-Rosslau and Eberswalde, have also flirted with temporary tenants. Tangible results are hard to come by. Surveys by the Leibniz Institute of Ecological Urban and Regional Development suggest 47% of the temporary residents in Goerlitz 'could imagine moving there'. Nobody seems to know if they ever actually did. In Guben, around 13 families out of 48 have stayed. In Frankfurt an der Oder, six tenants out of 20 signed permanent rental contracts. Some folk do love the idea. As one wannabe Goerlitz-er, interviewed by the Liebniz Institute, explained, 'I like Goerlitz a lot because it's still a city – but without those big city problems.' On the other hand, those crumbling Italian and French villages do conjure up bucolic, olive oil-drenched visions: baguettes for breakfast, quaint locals, romantic misunderstandings and sun-sweetened tomatoes, with lashings of red wine, for lunch. Eisenhüttenstadt, built in the 1950s as a model socialist city and once called Stalinstadt, offers a greying collection of Soviet-era prefab apartment blocks in a park-like setting. Good times for fans of Brutalist architecture. But would you really want to live there? There's something even worse lurking in former East Germany. It's here that the country's far-right party, Alternative for Germany or AfD, is particularly popular. The AfD, with its xenophobic policies, got at least a third of all votes in these areas in the last federal elections. In Goerlitz, the AfD – chapters of which are under observation by domestic spy agencies for their extremist tendencies – got almost 49%. Germany is already having problems attracting people to fill labour shortages caused by its ageing population. Around 400,000 people annually are needed here to remedy those. But at the same time, the most recent research by the Institute for Employment Research at Germany's Federal Employment Agency shows that one in four immigrants is considering leaving town. Two-thirds of around 50,000 immigrants polled said they had experienced discrimination, especially in interactions with authorities, police and at the workplace. Another third said they'd never felt welcome in Germany. And then, they add, there's the stifling bureaucracy, the high taxes and huge health insurance bills. Can a free bike and two rent-free weeks combat all that? Seems unlikely. Cathrin Schaer is a freelance journalist living in Berlin.
NZ Herald
a day ago
- NZ Herald
Du Val founders will continue to have assets frozen and passports held by court
Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech. Du Val founders will continue to have assets frozen and passports held by court Kenyon Clarke, one of the founders of Du Val. Photo / Supplied By Rowan Quinn of RNZ The founders of the collapsed Du Val companies will continue to have their assets frozen and their passports held by the court, the High Court has ruled. Du Val is in statutory management, owing more than $300 million, and its main owners, Charlotte and Kenyon Clarke, are in receivership, with a preservation order on their assets. The Financial Markets Authority (FMA) obtained the interim order last August and the couple fought back against that at a hearing last month but the court has agreed with the FMA. In laying out the background to her decision, Justice Anderson said the High Court had the ability under the Financial Markets Conduct Act to make a range of protective orders for the benefit of 'aggrieved persons'.
1News
a day ago
- 1News
Du Val founders assets remain frozen and passports held by court
The founders of the collapsed Du Val companies will continue to have their assets frozen and their passports held by the court, the High Court has ruled. Du Val is in statutory management, owing more than $300 million, and its main owners, Charlotte and Kenyon Clarke, are in receivership, with a preservation order on their assets. The Financial Markets Authority (FMA) obtained the interim order last August and the couple fought back against that at a hearing last month but the court has agreed with the FMA. In laying out the background to her decision, Justice Anderson said the High Court had the ability under the Financial Markets Conduct Act to make a range of protective orders for the benefit of "aggrieved persons." "These are individuals or entities who may have suffered harm or loss as a result of certain conduct that is under investigation by the FMA," she said. ADVERTISEMENT She noted the FMA's orders were opposed by the Clarkes but ruled they should continue until further order of the court. The morning's headlines in 90 seconds, including Ozzy Osbourne dies, a worrying find on Rakiura Stewart Island, and new Coke coming. (Source: 1News) The decision also upholds the receivership and the overseas travel ban placed on the couple. Justice Anderson's decision was heavily suppressed, mainly because of suppression orders that arose in hearing, some of which are under appeal. Then, each side had argued different aspects of the arguments or preliminary evidence could prejudice later action if made public.
