ANZ Bank New Zealand accounted for almost half of the $2.17 billion net outflow of KiwiSaver funds from the big four banks, and was the only one of the major lenders whose regular member contributions didn’t make up for the customer losses.
The country’s biggest KiwiSaver provider operates three KiwiSaver schemes, including a default option, and reported a net outflow of $1.08 billion of funds to rival schemes in the March 2025 year.
That accounted for 5.1% of ANZ’s funds under management in the prior year and overwhelmed the inflows from the regular contributions made by members, their employers and the government subsidies, with net redemptions of $205 million.
That left the ANZ schemes to rely on $670.7 million of investment gains to grow funds under management to $21.5 billion as at March 31 from $21.03 billion a year earlier.
An ANZ spokesman said the KiwiSaver transfer market was extremely competitive, with a 22% increase in the number of transfers to 163,000 in the March year, and that the bank’s checking in with its customers to make sure they feel in control of their investments.
“We’re continuing to invest in intuitive tools and digital experiences, such as our Fund Chooser Tool and Government Contribution Tracker to make managing KiwiSaver simpler for customers,” the spokesman said in an emailed statement. “Additionally, we’ve refreshed our investment beliefs and continued to reduce fees across several of our funds benefiting our members and reinforcing our commitment to delivering strong, long-term value.”
Bigger is better?
ANZ’s contraction was the most marked among the big four banks in a year where the likes of Milford Asset Management and Generate Investment Management enjoyed big swings their way, and as the smaller new entrants such as Kernel Wealth and Sharesies hustled harder to win new customers to their schemes. The big four banks’ net outflow in the March 2024 year was $1.32 billion.
Massey University’s head of school of accountancy and finance, Claire Matthews, said the banks are going to struggle to retain the large memberships they built up from the early days of the savings scheme, when many people simply wanted the convenience of bundling their financial services with one provider.
“People are getting more proactive,” Matthews said. “The banks are going to struggle to interact with their customers in the same way as something like a Sharesies, particularly because of their scale and because that’s not their relationship with their customer.”
While ANZ posted the biggest exodus of KiwiSaver funds, all four of the big banks reported net fund outflows to rival schemes in the March year.
ASB Bank’s net outflow of $476.6 million was the second largest at an aggregate level, but the smallest proportion of the prior year’s total funds under management at 2.9%.
Like ANZ, ASB has a relationship with global heavyweight BlackRock although it’s tended to outperform the other big four banks across its KiwiSaver returns over the past 10 years.
New blood
And since the March 31 balance date, the bank appointed the well-respected Frank Jasper as its chief investment officer, having tapped him to sit on its investment committee after he left Fisher Funds in 2021.
ASB’s member contributions more than made up for the lost customers to rival schemes, with a net inflow of $281.4 million. Investment gains of $1.22 billion on top of that helped swell ASB’s funds under management to $18.03 billion at the end of the March year from $16.52 billion a year earlier.
Jasper said KiwiSaver is a growth area for the bank and a real focus.
“Our strong fund recent performance is driven by the expertise of ASB's in-house investment team, supported by the global reach, expertise and proven track record of BlackRock, our investment partner,” he said in an emailed statement. “This, in combination with our low fees and the improvements we have made to our customer communications and digital tools, has helped improve customer satisfaction and built a more transparent and engaging experience.”
Similarly, Westpac’s net outflow of $353 million – or 3.2% of prior year funds under management – to rival schemes and other withdrawals were offset by the regular contribution inflows, with membership activities adding a net $151.8 million.
With investment gains, Westpac’s KiwiSaver funds under management grew to $11.66 billion from $10.91 billion.
Still hustling
Nigel Jackson, chief executive of BT New Zealand, said his team is working hard to attract and retain KiwiSaver members, with new offerings such as the recent high growth fund gaining traction.
“Customer engagement is extremely important and we contact customers regularly to help them manage their KiwiSaver account,” he said in an emailed statement. “While our total number of KiwiSaver members has declined slightly, our retention rates are broadly in line with industry trends and we believe we’re well-placed to grow our customer base and our funds under management.”
Bank of New Zealand’s KiwiSaver funds are slightly different to the other three in that they’re part of the FirstCape empire, which since the March 31 balance date made its first post-merger acquisition of Consilium NZ, which has close ties to adviser networks.
And as FirstCape chief Malcolm Jackson noted at the time of the acquisition, about 80% of KiwiSaver switches are advised, rather than from recommendations, direct advertising or cold calling.
BNZ’s net outflow to rival schemes in the March year was $259.8 million, or 4.6% of the March 2024 funds under management, while member contributions more than offset to add a net $219.4 million to the funds. Combined with investment gains, the scheme grew to $3.57 billion from $3.39 billion a year earlier.
Across the four banks, management fees rose to $350.5 million from $314.5 million. ANZ’s fees grew at the slowest pace, up 6.4% to $167.6 million across the three schemes, while ASB’s climbed 17% to $103.9 million, Westpac’s gained 15% to $52.8 million and BNZ – under FirstCape management – climbed 17% to $26.2 million.
Massey’s Matthews said the regular contributions from KiwiSaver members means it becomes self-sustaining once a provider hits a certain number of members and scale.
“You don’t necessarily need a whole lot more business to keep going,” Matthews said. “That may mean the banks are less concerned about losing some of that.”
Reporting by Paul McBeth. Image from Curious News.
Disclosure: Paul McBeth has owned units of Milford-managed funds since January 2024, and had his KiwiSaver with the fund manager since 2014.
