Default funds will be banned from investing in fossil fuel production to negate the risk of New Zealanders’ retirement savings being invested in stranded assets as the world moves to reduce emissions.
“No New Zealander should have to worry about whether their retirement savings are causing the climate crisis,” said Climate Change Minister James Shaw.
“That’s why our government is moving default KiwiSaver funds away from fossil fuels, putting people and the planet first.”
KiwiSaver members are allocated to a default provider if they don’t actively choose a KiwiSaver fund when commencing their employment. Around 690,000 people remain in a default fund, with approximately 400,000 of those having not made an active choice to stay there.
The New Zealand government also believes that the switch to more responsible investment will also improve member outcomes.
“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,” said Commerce and Consumer Affairs Minister Kris Faafoi.
“So we know that moving away from investments in fossil fuels doesn’t have to mean lower returns.”
The changes will also prevent default fund providers from investing in weapons like cluster munitions and anti-personnel landmines (which are subject to the Convention on Cluster Munitions and the Ottawa Treaty respectively). While default fund providers were already moving away from investment in weapons, the changes now enshrine that requirement in default fund settings.
