The Greens and National are moving closer on KiwiSaver, with Prime Minister John Key saying yesterday the Government was keen to look at how it can combat high KiwiSaver fees.
The Green Party on Sunday said it wanted to create a public KiwiSaver fund to lower costs and boost the nest eggs of savers on retirement.
To reach the necessary economies of scale to achieve that, Greens co-leader Russel Norman wanted the fund to be managed by the Guardians of the New Zealand Superannuation Fund - a $16 million fund.
The front-end provider could be Kiwibank or the Inland Revenue Department, as recommended by the Government-appointed Savings Working Group.
Last month, the Financial Markets Authority's annual report showed 42%, or $43 million, was charged in fees on fund earnings of $104 million for the six default providers.
The ratio was 28% for non-default providers, which charged $121 million in fees on fund earnings of $432 million.
Mr Key said yesterday KiwiSaver fees had been high with default providers, given the level of management required, but the managers effectively managed the money on the savers' behalf.
"If you outsource to the government, it might lead to an implied government guarantee that we are actually guaranteeing your funds and in KiwiSaver there is no guarantee that your funds are safe," he said.
Dr Norman said there would be no implicit government guarantee with a public KiwiSaver fund.
"Our proposal to offer a public KiwiSaver fund to lower costs and fees does not come with any government guarantee."
If any KiwiSaver provider went broke, the Government might have to respond as National did when AMI got into trouble, he said.
"What I can guarantee is that, by reducing KiwiSaver fees and costs significantly, New Zealanders' nest eggs will grow considerably."
The best way to ensure KiwiSaver providers did not get into a situation where they were too big to fail was to regulate the industry well, Dr Norman said.
Without good prudential oversight and reporting, New Zealand could end up with another AMI situation, where the government had little choice but to bail out poorly regulated KiwiSaver providers.
The Greens, like National, wanted to use the new Financial Markets Authority to ensure clarity in the markets for investors.