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What Should I Choose - ANZ Or ING KiwiSaver?

Mary Holm
Mary Holm


With the changes to ING over the last few months - it is now 100 per cent owned by ANZ which also owns National Bank - it is interesting to read each of their KiwiSaver investment statements one after the other.
ING has two KiwiSaver schemes, one based on the SIL scheme and one set up as the default scheme. The SIL scheme is different, but ING's default scheme is broadly identical to the ANZ and National Bank schemes.
In all three schemes, ING is the investment manager and administrator and the options are the same. The directors are the same.
So if I decide that I want about 50 per cent in shares, I can get the same "balanced" option by going to ANZ, the National Bank or ING.
However, if I go to ANZ or the National Bank, I pay investment fees of 0.90 per cent, trustee fees of 0.065 per cent and an admin fee of $24 a year and in-fund costs. In 2009 the MER was 1.23 per cent.
In contrast if I go to ING directly I pay investment fees of 0.50 per cent, trustee fees of 0.05 per cent and admin fee of $33 a year and in-fund costs. The MER in 2009 was 0.60 per cent. Even though the admin fee is higher, the total fees are considerably less in ING unless I have a really low balance.
So the first question is: "Why would I pay more than twice as much to go to ANZ or National Bank compared to ING for the same thing, when ING is owned 100 per cent by ANZ?" Members are paying a lot to have ANZ on their statements as opposed to ING.
The second question is: "How can an adviser for the ANZ Bank recommend the ANZ scheme when they could recommend the ING scheme?"


Mary Holm: Good detective work, but you're missing one vital clue. The difference is that the default ING KiwiSaver scheme uses some passive management - in international shares, Australasian property and so on - while ANZ and National use only active management, which costs more to run.

"Active managers undertake extensive research of markets and industries and assess the prospects of individual companies," says Gita Parsot of ANZ. "Based on this assessment, they make decisions about whether to hold a particular asset, how much to hold of it and also when is the right time to sell it."

In contrast, passive managers simply buy and hold a broad range of assets - often all the shares or bonds in a market index, in which case their funds are called index funds.

The active/passive differences "are reflected in the pricing of the schemes, and in normal circumstances the returns achieved by investors", says Parsot. "For example the 12-month performance for the ING KiwiSaver Balanced Fund was 17.00 per cent whereas for the ANZ KiwiSaver Balanced Fund it was 19.53 per cent."

At the risk of being rude, my response to that is, "So what?" A single year's returns tell you nothing. To be fair, Parsot also refers to "higher long-term returns" from active management. But I wouldn't necessarily expect that either.

I'm yet to be convinced that active funds perform better than passive over the years, especially after allowing for the lower passive fees.

Anyway, we now have an explanation for the differences you noted. I must say, though, that it would be helpful if ING, ANZ and National Bank explained the active/passive issue in their documents clearly enough for somebody like you - who has obviously done your homework - to understand.

Hopefully the new KiwiSaver disclosure rules that the Government is working on will make such issues clearer.

By the way, Parsot also points out that ING's other KiwiSaver scheme, SIL, "which is actively managed in the same way as the ANZ and The National Bank, has a pricing structure identical to the two bank schemes.

In short, the cost of buying an actively managed scheme is the same whether you buy it from ANZ, the National Bank or ING."
Mary Holm is the author of bestselling books on KiwiSaver and personal finance. She is also a highly praised seminar presenter. Her written advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following that advice.      

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