30 November 2011
Unfortunately Sunday Star-Times piece of October 23rd, ‘The Hidden Costs of Saving’ was neither fair nor accurate. The article includes a chart placing your Law Retirement KiwiSaver Scheme as the worst of 25 providers, with huge and excessive costs. The article by Rob Stock relied on data sourced from the Retirement Commission and prepared by Melville Jessup Weaver. The data was wrong, with Melville Jessup Weaver mistakenly assigning the LRKS with a preposterous Trustee Fee of 0.75% p.a. The proper amount is “up to 0.075% p.a.” The Sunday Star-Times article propagated this 10-fold error over 25 years. Publication of this wrong data has unnecessarily alarmed some Members and also Advisors who have been supportive.
It is true that costs of operating The Law Retirement KiwiSaver Scheme are expected to be a little elevated initially – at least as a percentage of funds-under-management when compared with the bigger schemes. The LRKS is a proudly independent provider with its own trustee, its own strategy, auditors and fixed scheme costs, spread over a small, but growing membership. It is noteworthy that in the case of the LRKS, several of these costs are fixed dollar sums. Fixed dollar cost will not escalate to the same degree as charging wholly as percentage of Funds-under-management, as the LRKS scheme grows. The costs of the LRKS expressed as a percentage, should consequently trim down over time and with growth of membership and account balances.
The Administrators of The Law Retirement KiwiSaver Scheme have expressed disappointment over the story’s inaccuracies to the Sunday newspaper. We remain acutely conscious of costs, but also focussed on adding members and achieving superior investment returns for existing members over the medium and longer-term. Both the LRKS’ Balanced and Dynamic funds are currently positioned to participate in an expected broad recovery in financial markets.
Investment Advisor to LRKS