The government is being accused of 'virtue-signalling' after banning KiwiSaver default funds from investing in fossil fuel companies.
A number of changes will be made to how the default funds are run, including the new ban.
KiwiSaver members are allocated a default provider if they don't actively choose a KiwiSaver fund - and nearly 700,000 people are currently in that situation.
Politicians have long been calling on big state funds like the Super Fund and ACC to make 'ethical investments', but now the government is targeting individuals' KiwiSaver funds.
Greens co-leader and Climate Change Minister James Shaw said KiwiSaver was government-sponsored, and so saw no problem with the move.
"Because of the relationship between the government and the default funds they've got to be consistent with government policy and the law passed by Parliament last year."
People could still invest in fossil fuels, he said, they just had to move away from default funds.
Sam Stubbs from the KiwiSaver provider Simplicity said fossil fuel companies were not delivering great returns, so were not a hot pick for investing at the moment anyway.
Excluding fossil fuel investment in itself was not that controversial, he said, but it was notable the government was targeting individuals' funds.
"There's always the risk of moral hazard ... where the government is playing God about where your money should be invested."
That's likely why they chose fossil fuel and only one sector as "it's the least controversial, the most salient topic right now", he said, as well as being "sensitive to the Green Party" and easy to explain to the public.
Chief Executive of the Petroleum Exploration and Production Association, John Carnegie, said while the industry was on board with the transition to renewable energy, he did not believe the government should be dictating which investments are acceptable.
The choice should be made by the saver, he said, in part because deciding what is "responsible or not is highly subjective".
Stubbs agreed, saying people might not like plastics for example.
"And you might say let's get rid of plastics ... that means you get rid of all shoes, ear implants, heart valves, plastics are in everything - there are very obviously some bad things but some great things as well, all of these things are judgements."
With investors already worried about their KiwiSaver balances due to uncertainty created by the Covid-19 virus, National's Paul Goldsmith said the government has chosen now to "meddle" with their investments.
"The coronavirus will have a huge effect on our economy, an economy that is weaker than it should be because of this government's poor economic management.
"Instead of focussing on ways to improve this, the government is tinkering around the edges and indulging in virtue signalling", he said.
That position was a bit absurd given National supported legislation like the Zero Carbon Act, said James Shaw.
"To then say we want to continue investing in fossil fuels is inconsistent with that."
Other changes are for default funds to shift to a balanced rather than conservative setting - meaning higher risks but a higher return on investments.
There will also be further scrutiny of KiwiSaver fee structures, to make sure they are simple and easy for people to see and understand.