Stuff.co.nz - KiwiSaver members are being wooed with free insurance and credit card rewards schemes, prompting concern from regulators and other providers.
AMP announced last week that it would be offering a free accidental death benefit of up to $100,000 to existing AMP KiwiSaver Scheme members and new members who join before the end of 2014.
Meanwhile, ASB has recently started allowing True Rewards credit card points to be deposited into customers' ASB KiwiSaver Scheme accounts. Customers can even donate their points to someone else's KiwiSaver.
The move hasn't been advertised but it has proven popular: the bank says customers deposited more than $100,000 worth of True Rewards dollars into the scheme in the first month.
Westpac also allows its credit card reward scheme, hotpoints, to be used for KiwiSaver contributions, while BNZ does the same with Flybuys.
While attractive to customers, these incentives are under scrutiny by the Financial Markets Authority, which warns they should not be advertised as reasons for KiwiSaver members to switch schemes.
Figures released by the FMA last week show the amount of money switching schemes nearly doubled to $1.4 billion in the year to June 30.
"The law does not prevent minor financial advantages that are incidental or secondary to a KiwiSaver scheme membership," FMA director of compliance Elaine Campbell said.
"We are concerned about the level of information, support and access to financial advice that is provided to bank customers when they are presented with the option to transfer or switch KiwiSaver schemes."
This is an ongoing focus for FMA's work, she said.
"In this context we are concerned to ensure that any such incidental rewards are not inappropriately promoted to KiwiSaver members as reasons to switch their scheme."
Anthony Quirk, chairman of KiwiSaver provider Milford Asset Management, said he shared the FMA's concern.
"It's very important KiwiSaver members understand what they are getting into and that they aren't attracted solely because of an incentive.
"The key is the return you get after fees. The difference between a high-return and low-return fund, particularly for younger people, is simply massive. A relatively small incentive payment could overshadow the much more important issue of the return you get from a fund."
But AMP head of contemporary wealth management David Wallace said the offer of free accidental death cover was just a part of the company's KiwiSaver package.
He said for a customer walking in off the street the cover would cost about $150-$200. It would pay out if someone died from a motorcycle crash but not if they died from cancer.
"For us it's about continuing the conversation. We've got a view that educating KiwiSavers is a key part of our offering, and also talking through the wider picture around protection.
"This is one part of the support we wrap around the KiwiSaver offering."
ASB head of wealth products Roger Clayton said rewards schemes were traditionally used for instant gratification, but allowing them to be used for KiwiSaver gave customers another option.
"You could choose to buy a toaster or a hair straightener or you could choose to contribute to your retirement savings or someone else's."
The Government has already clamped down on KiwiSaver incentives, passing a law change in 2012 that prevented KiwiSaver accounts being linked to external financial advantages.
- Sunday Star Times