Many people have their KiwiSaver schemes with their bank, and that arrangement is far too cosy, a group of financial advisers say.

A group of financial planners have issued a ten-point battle plan to overhaul KiwiSaver.

The current KiwiSaver settings had cost savers in the giant "default" KiwiSaver funds $1 billion over the past six years, said the group, headed by financial adviser John Cliffe.

Cliffe said the group was inspired to speak out after becoming incensed by the soft New Zealand reaction to the Australian Royal Commission on Banking.

In particular, the big Australian banks were all in a conflicted position over KiwiSaver, borrowing a large amount of money from the KiwiSaver schemes they ran.

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"Over 400,000 KiwiSavers who have invested in default funds have missed out an estimated $1 billion over the last six years," the group said in an open letter setting out ten changes they said must be made to KiwiSaver.

The billion dollars represented capital growth savers in the default funds would have got from investing in higher risk, higher return growth funds.

Default funds are low risk funds into which KiwiSavers who don't pick their scheme themselves are shunted by the Inland Revenue Department when they first sign up, with the lion's share having gone into the default funds of the big Australian-owned banks.

Much of the default fund money was invested in deposits at the big banks that ran them.

SUPPLIED John Cliffe, financial adviser, is among those calling for an overhaul of KiwiSaver.

"$1.5b of their funds are invested in securities issued by Australian-owned banks and insurance companies," the advisers said.

​The default scheme arrangement favoured the banks, not the KiwiSavers, the advisers said.

The default KiwiSaver providers had proved themselves to be poor at engaging with default KiwiSavers, which earned them a blast from the Financial Markets Authority in October last year.

Rather than getting a telling off, the banks needed to have targets set for getting savers out of default funds and into more suitable funds, the advisers felt.

If default KiwiSaver scheme providers failed to get a KiwiSaver into another fund within 12 months, they should lose them either to another default KiwiSaver manager who was hitting their targets, or to a government-run KiwiSaver balanced fund, Cliffe said.

"These companies benefit when cash and bond securities are held by themselves or in each other," he said.

"Their gain comes at the expense of KiwiSaver investors who effectively receive lower returns than they ought to be getting from a retirement investment. These poor returns are suffered primarily by New Zealanders least equipped to make considered investment decisions and pro vide for their retirement."

Figures from fund research agency Morningstar show in the 10 years to the end of March, the average per annum return for a default fund was 5.5 per cent, compared to 8 per cent by the average growth fund.

The advisers felt the conflicted of interest in these arrangements were not adequately declared to KiwiSavers.

The advisers were also critical of the government, estimating that many KiwiSavers were on the wrong tax codes, and were overpaying tax on their returns, something the IRD could sort out, if ordered to by politicians.

They estimated around $70m too much tax had been paid by KiwiSavers.

"The problems with default KiwiSaver funds are systemic and long-standing," said Cliffe.

But he said: "Using publicly available data the group has, for the first time, quantified how default KiwiSavers are missing out."

The advisers who signed the letter were all highly-qualified Authorised Financial Advisers. They were Cliffe, Phil Ison, Alistair Bean, Rachelle Bland, Michael Lay, John McLean, John Milner, and Tony Walker.