Does Your KiwiSaver QROPS Invest In Weapons?

A public outcry has broken out in New Zealand after revelations that Kiwisaver pension funds were breaking laws by investing in arms companies.

KiwiSaver pensions are forbidden by law from backing firms that make weapons.

Over the years, many of these KiwiSaver pensions have taken in expat pension transfers from the UK as Qualifying Recognised Overseas Pension Schemes (QROPS).

Providers breaking the law can face fines and other sanctions imposed by New Zealand financial regulators.

Many former KiwiSaver QROPS are no longer accepting transfers from UK onshore pensions, but still have to abide by the investment rules set out in New Zealand.

Ban on mine and nuclear weapon companies

Laws ban investments in firms that make cluster mines, are involved with nuclear weapons or manufacture anti-personnel mines.

Each KiwiSaver has to publish an annual list of companies in which they have a financial interest.

These lists are published on the provider web sites.

From the end of 2016, KiwiSavers will have to report on their investments every six months.

QROPS investors can check whether funds offered by their KiwiSaver providers are on the prohibited lists by downloading the investment lists and looking up the business sectors of companies which they have a stake in.

Many of the investments are not direct – for instance a fund may invest in a company that invests in a forbidden arms manufacturer or the company may be a subsidiary of another in which shares are held.

Many of these holdings are index trackers that have passive investments in funds.

Police to investigate financial firms

Commerce Minister Paul Goldsmith confirms laws banning weapons apply to KiwiSaver schemes and explained police would have to investigate to see whether any breaches of the rules have occurred.

KiwiSavers run by large New Zealand financial firms Westpac, AMP and Aon allegedly invested NZ$2.3 million in blacklisted companies.

All three ran KiwiSaver QROPS until earlier this year, when the schemes were delisted for reasons unconnected with their investments in weapons makers.

Westpac has pledged to divest the shares in arms companies.

None of the trio currently have QROPS list by HM Revenue and Customs (HMRC) as open for transfers of expat retirement savings.