KiwiSaver investors are being urged to think about how much they are paying in fees.
The warning has come from former Tower Investments chief executive Sam Stubbs, who believes many investors are paying management fees that are far too high.
He is part of a team that today launched a new online, not-for-profit, KiwiSaver product called Simplicity.
Simplicity will charge an annual administration fee of $30, plus an annual management fee of 0.30 percent per year of the total funds invested. Simplicity intends to give 15 percent of its annual management fee to the Simplicity Charitable Trust.
The Commission for Financial Capability says competition is good for the consumer and a new entrant like Simplicity does change the playing field.
"Most people don't have a clue how much they're paying because it is given as a percentage not a $ amount in the annual statement, which is something we'd like to see changed, " says General Manager of Investor Education David Boyle.
"Hopefully, at the very least, this will encourage people to take an interest in their fees because it can make quite a difference to what they end up with when they retire."
Simplicity's Sam Stubbs describes investment fees as the biggest household expense that many people never think about.
He says the average KiwiSaver fund charges 1.3 percent a year in fees.
That might not sound like much, but he says at current rates the average KiwiSaver investor will pay $54,700 in fees over their investing lifetime. That contrasts with $35,900 for mobile phone costs and $37,200 for power bills.
Each cent paid in fees is one cent less that will be left in the fund to compound over time.
Mr Stubbs estimates the average KiwiSaver investor could end up $65,800 worse off over their lifetime of investing.
He calculates that paying 1.3 percent in fees each year will eat up 25 percent of the returns generated by the average KiwiSaver fund.
Another of the Simplicity directors is Mark Fitzgerald, a former head of Westpac's private wealth management business. Kirsty Campbell, who was the Head of Supervision at the Financial Markets Authority, has also joined the board.
Mr Stubbs says Simplicity will use low cost passive funds rather than actively managing the investments.
Passive funds are able to lower their costs because they do not use staff to actively select stocks. Instead they mirror a particular market, or index, like the NZX50 or the S&P500.
Simplicity's international investments will be managed by US firm Vanguard, while the local investments will be managed by Mr Stubbs.
He describes the KiwiSaver industry as a "gravy train".
"New Zealanders deserve more transparency, better online services, and significantly reduced Kiwisaver fees - little of which they are currently getting."
He points to figures from Treasury that show fees paid to KiwiSaver providers totalled more than $1 billion between July 2007 and March 2015. The FMA said KiwiSaver fees are among the top half of OECD countries.
Mr Stubbs says that another goal he hopes to achieve is to lift financial literacy levels in New Zealand.