KiwiSaver members are switching providers and demanding answers from banks after learning their schemes were investing in companies making cluster bombs and anti-personnel mines.
RNZ revealed yesterday that hundreds of thousands of KiwiSaver members in government-appointed default schemes may be unknowingly investing in such companies.
At least five of the nine default KiwiSaver providers invested in these types of companies, despite them being banned by government agencies such as the New Zealand Superannuation Fund and ACC.
The default funds run by ANZ, Westpac, ASB, AMP and Grosvenor invested in the anti-personnel mine manufacturer Northrop Grumman and nuclear weapon or base operators Fluor Corp, Honeywell International and Lockheed Martin.
Westpac, ASB, BNZ, Grosvenor and AMP also invested in cluster bomb manufacturers General Dynamics and Textron.
The revelations have drawn an immediate response from people enrolled in the default schemes, who expressed horror and surprise that KiwiSaver schemes were investing in such companies.
Dr Nathaniel Janke-Gilman wrote that he believed banking executives who "put profits before ethics" were on the "wrong side of history".
In a letter, directed at ASB general manager of wealth Jonathan Beale, Dr Janke-Gilman said he was told by a branch "there's no proof ASB is caught up in this business", but his own internet research quickly found otherwise.
He implored the bank manager to "use his powers for good," but said, in the meantime, he would be looking for a KiwiSaver provider with "ethical investment options".
Many said on social media that they would switch KiwiSaver providers, or had already done so.
Guess who’s changing their KiwiSaver this morning. https://t.co/5lv5SuoXKP— mikeforbes! (@mikeforbes) August 17, 2016
AMP KiwiSaver member Shane Howearth said on Facebook he was "blind" to where his money had been going.
"I just let the money go into the default scheme without any thought.
"Moving from AMP to Kiwibank tomorrow, have spoken to Kiwibank."
ASB customer Rebekah Graham said on Facebook it "horrifies me on so many levels".
"That my kids' KiwiSaver plan, which I so responsibly signed them up for, funds killing children in other countries is quite distressing."
Twitter user Genevieve de Pont was also surprised, tweeting that she felt naive, "but I never considered that my KiwiSaver fund might invest in armaments".
I feel naive when I write it out like this, but I never considered that my KiwiSaver fund might invest in armaments. https://t.co/dPB2Ktf1HD— Genevieve de Pont (@gendepont) August 17, 2016
Romelli Rodriguez told RNZ she immediately switched to another provider after finding out what her provider, ASB, was investing in.
"It was actually really easy... I just had to contact the provider that I wanted to go to."
ASB had previously assured her that its scheme did not invest in nuclear or weapons manufacturers, she said.
It was unfair to criticise people - many of whom were in KiwiSaver by default - for not knowing what their scheme was investing in, she said.
"You'll have people with very little experience in investing who are then put into this situation ... and they're relying on banks to provide them information, and knowing what questions to ask."
Another ASB customer, Samantha Spence, posted on the bank's Facebook page that she too had already switched over.
"I was devastated to find out that my KiwiSaver money is being invested in weapons, tobacco and god knows what else.
"I've promptly moved my KiwiSaver investment to Kiwibank, which seems to be far more transparent about where my money is going."
Others asked their providers if they would be changing how KiwiSaver funds were invested.
Westpac customer Victoria McPherson wrote on her bank's Facebook page that she was "appalled".
"I am hoping that you will pledge to immediately rectify this otherwise I am taking my KiwiSaver and other banking business that I currently have with you elsewhere."
An online petition calling for Commerce Minister Paul Goldsmith to ban KiwiSaver from investing in such companies had attracted about 2500 signatures so far.
Mr Goldsmith said yesterday the government had no plans to set the rules about what KiwiSaver providers, default or otherwise, could or could not invest in.
Regulations required KiwiSaver providers to disclose the investments they have made and annual statements would also include a full list, he said.
"New Zealanders with KiwiSaver accounts have a choice about which scheme to join and can find out what that scheme invests in."
In responses this afternoon, AMP said it had been moving away from the investments that had been called into question since 2014, and would be fully out by the end of the year.
ASB said it was already reviewing its policy, while Westpac and ANZ said they were now looking into theirs.
BNZ said it had no plans for a special review.