Stockholm (NordSIP) – According to the government of New Zealand, the default providers of its ‘opt-in’ pension funds, KiwiSavers, will start excluding companies involved in the production of fossil fuels from their investment portfolios.
Not unlike the case of AP7 in Sweden, when people enrol in KiwiSaver but don’t actively choose an investment fund, the Government allocates them a default fund. Around 690,000 people remain in a default fund, and approximately 400,000 of those have not made an active choice to stay there. The terms and conditions that apply to a default provider’s appointment are contained in an instrument of appointment, which is agreed to prior to the term of appointment. There are currently nine default fund providers, and their terms expire in mid-2021.
Every seven years, the Government reviews the settings for default providers ahead of appointing a new selection of default providers through a competitive tender process. The new settings will apply to the default funds that are in place from mid-2021. The procurement process to appoint the new default KiwiSaver providers commences later this year.
The decision “reflects the Government’s commitment to addressing the impacts of climate change and transitioning to a low-emissions economy,” Commerce and Consumer Affairs Minister Kris Faafoi said. “It also makes sense for the funds themselves given that there is a risk of investing in stranded assets as the world moves to reduce emissions. In 2017, the $47 billion NZ Superannuation Fund adopted a climate change investment strategy that resulted in it removing more than $3 billion worth of stocks that exceed thresholds for either emissions intensity or fossil fuel reserves, without negatively affecting performance. So we know that moving away from investments in fossil fuels doesn’t have to mean lower returns.”
Of the approximately 690,000 New Zealanders who have stayed in default KiwiSaver funds, which they were automatically enrolled in the pension scheme when they started a new job, 400,000 have not made an active choice to stay there.