Thousands KiwiSavers may be missing out on potential earnings because providers are not doing enough to help them invest in the right fund, the FMA says.
The Financial Markets Authority (FMA) annual report has ticked off providers of default conservative funds for not doing more to educate their members, and helping them to decide if they are in the best fund.
"We understand that engaging with default members can be difficult ... but the lack of progress in this area by the default schemes is disappointing," said the Authority's chief executive, Rob Everett.
Fewer people switched out of the conservative, default funds last year than the year before.
The nine default KiwiSaver providers are required to help investors pick the most appropriate fund so that they do not miss out potential investment earnings.
Mr Everett said the investment companies were earning more money from fees from default members, and seemed to have little trouble taking customers off other providers.
"We expect them to deliver on what they said they would do in their tenders to the government seeking default status. Or, if they have tried that and it didn't work, to try something more effective."
More than 172,000 people switched providers last year, while 154,531 people joined the scheme.
Overall, more than 2.7 million people are in KiwiSaver, with investments valued at more than $40 billion, and returns of $2.7b, more than double the previous year.
From next March, annual statements must disclose in dollar terms the fees people pay, but Mr Everett said that should be extended so that the fee as a percentage is also disclosed.