Five Life Insurer CEOs


OUR COMMENTS ON THE LIFE INSURER GANG:

  • Hidden expenses cannot occur. Patently a false claim by this clutch of life insurer CEOs. Un-quantified expenses add-ons are a feature of most providers’ schemes, including some of the default products.
  • Unit pricing errors – the boys admit them but argue there’s an equal number in favour of customers. There is no evidence of that whatsoever, the published cases are all in favour of the companies.
  • They argue they provide best practice standards. They do not. Several of them don’t even have independent trustees of their schemes, some have expansive reserving discretions in their trust deeds, and all of them have used unitisation in the past instead of wraps which would have saved their customers millions of dollars in tax. The reason for unitisation is to prevent transparency.

Morgan‘s not on the money
17 May 2007
Sunday Star Times

Outraged at criticism of the savings industry by Gareth Morgan in last week‘s Business Section, six of the nation‘s most powerful money men hit back. AMP managing director Greg Camm speaks out personally on Morgan‘s accusations.

The savings industry welcomes and encourages analysis and commentary on the range of new KiwiSaver products that will be available to investors.

But it does expect analysis and commentary to be based on fact, to be current and accurate. The savings industry totally rejects recent comments by Gareth Morgan, of Gareth Morgan Investments, accusing the savings industry of "naughty behaviour", by implication, in KiwiSaver products. (Gareth Morgan Investments offers a KiwiSaver scheme.)

We accept that Morgan has achieved recognised standing as a trusted investment authority with the public.

This position requires that comment he provides is current, free of bias and factually correct. Instead Morgan has used his position as an industry commentator to promote his own KiwiSaver scheme, at the same time painting his competitors in a negative light through comments that do not reflect current industry practices - either in respect specifically to KiwiSaver or the industry more generally.

We encourage investors to ask questions and to seek independent advice before committing their hard earned savings to KiwiSaver.

However, investors can take great comfort from the safeguards that government and officials have built into the KiwiSaver approval and governance process:

    * KiwiSaver will be governed by strict regulations that place considerable onus on fund managers to manage the funds in the best interests of investors.
    * All KiwiSaver schemes are reviewed by the government actuary before approval and registration to ensure all fees and charges are fully disclosed and are not unreasonable. The government will also make a contribution to subsidise fees.
    * The six default providers (AMP, AXA, ASB, ING, Mercers and Tower) have been reviewed by an independent government- appointed panel and carefully selected before being formally appointed by the Minister of Finance.
    * The KiwiSaver Act contains provision for the government actuary to apply for cancellation of registration of a KiwiSaver scheme that fails to operate in an acceptable manner.
    * KiwiSaver products will be managed in accordance with a trust deed. Each product will have an independent trustee who must ensure that the plan is administered in accordance with the trust deed and the law.
    * Reporting to investors will be required to meet standards prescribed by the KiwiSaver legislation and regulations.

Any suggestion that the industry will not be working in the best interests of investors and consumers or that they offer KiwiSaver products and service that is not best practice, simply does not stand up to scrutiny.

Investors can be confident that hidden fees and expenses simply cannot occur.

The Securities Act and Regulations and the KiwiSaver process require full disclosure of all fees and charges payable from KiwiSaver schemes. Trustees are responsible for management of KiwiSaver funds. Individual member contributions to KiwiSaver cannot be channelled into any "reserve".

Reserves only arise in very specific circumstances involving invested employer contributions in participating funds and then only in accordance with the trust deed under the control of the scheme trustees.

Unit pricing errors have occurred in some funds from time to time, but with equally as many in favour of the investor - the important point is where errors have occurred they have been promptly remedied and the investor put into the correct position.

Pooling of funds for investment purposes is an accepted worldwide practice. Pooling provides cost efficiencies (ie, each transaction costs less), asset/security diversification and access to specialist fund managers.

All represent major advantages.

For example, the most efficient and effective way for individuals to invest in property is to invest through a pooled managed fund providing exposure to a number of properties.

Pooled funds provide accurate and independently verified statements to individual investors. Pooling is recognised as a significant advantage to investors in managed funds.

Investors can be confident that the investment savings and insurance industry has responded to the challenge of providing transparency, full disclosure, quality advice and sensitivity to its consumers.

We provide best practice standards which - coupled with the safeguards government and officials have built into the KiwiSaver design, approval, and governance processes - combine to provide great assurance and comfort to investors. There will be a range of KiwiSaver products on offer and investors need to ensure that they select the product with the level of diversification that suits their circumstances and risk profile.

Decisions regarding the investment fund for KiwiSaver should be reviewed regularly to ensure it continues to fit individual requirements. Advice will be available from product providers, financial advisers and sites such as the Retirement Commission website www. sorted.co.nz. Greg Camm, managing director, AMP Financial Services.

Marc Lieberman, chief executive officer, ING (NZ) Ltd.
Tony Hildyard, chief executive, Tower Asset Management.
Ralph Stewart, chief executive, AXA New Zealand.
Sean Carroll, managing director, Asteron Life NZ.
Milton Jennings, chief executive, Fidelity Life Assurance.