KiwiSaver is a voluntary work-based savings scheme set up by the Government to encourage New Zealanders to prepare for retirement. You can also use KiwiSaver to buy your first home. It may be your first investment and is likely to represent a large part of your retirement savings.
KiwiSaver is a managed fund. This means your money is pooled with other investors and spread across different kinds of investments.
You’ll either be automatically enrolled when you start a new job or you can opt in – through your employer’s scheme or directly with a scheme provider. If you don't choose a scheme for yourself, and your employer doesn't have a chosen scheme, Inland Revenue will allocate you to one of the nine government-appointed default providers. You can change KiwiSaver scheme whenever you like – even if you’ve already been allocated to an employer-chosen scheme or a default scheme.
You must be a New Zealand citizen or entitled to live in New Zealand indefinitely to join KiwiSaver.
If you’re employed, you can contribute 3%, 4%, 6%, 8% or 10% of your salary before tax to a KiwiSaver scheme. You can also make lump sum payments or set up additional direct payments.
If you’re self-employed, you decide how much you want to contribute and make payments directly to your chosen KiwiSaver scheme provider.
Your employer must contribute at least 3% of your salary. And if you’re aged 18 or over, the government also helps you save by giving you an extra 50 cents for every dollar you put in, up to a maximum payment of $521.43. To get the full Government contribution, you have to contribute at least $1,042.86 a year.
Unlike a bank term deposit, the return you get from your KiwiSaver scheme will go up and down over time, depending on what it’s investing in.
Growth and aggressive funds have a much higher proportion of ‘growth’ assets. Growth assets are things like shares and property and these go up and down in value more frequently than ‘income’ assets like cash and bonds. This means their returns may rise and fall quickly. However over time they typically provide a higher return.
Sorted’s Smart Investor tool shows you the actual and average returns for all KiwiSaver funds.
We monitor KiwiSaver providers closely to make sure they meet the required standards and act with your best interests in mind. All KiwiSaver schemes must be registered. See IRD’s list of KiwiSaver scheme providers for details. However there are some risks to think about.
Each provider offers a range of funds you can invest in. These typically range from ‘conservative’ (low risk, low return) to ‘growth’ or ‘aggressive’ (higher risk, higher return).
Your money will be invested in a default conservative fund if you don’t choose your own. Conservative funds are low risk but will provide lower returns over time.
If you’re planning to withdraw your money very soon (for example for a first home), the default fund may be suitable. If not, it’s unlikely to be a good option for the long term.
Once you’ve joined KiwiSaver, your money will be locked in until you qualify for NZ Super (currently 65), with a few exceptions, including first home withdrawals.
Fees can have a big impact on your total returns over the longer term. It’s worth keeping an eye on the fees you pay because as your balance grows, your fee will too.
When you join KiwiSaver you’ll receive a copy of the scheme’s product disclosure statement (PDS). You should read this as it describes how the scheme works and gives you an understanding of the risks, return and costs.
There are four very important questions you should ask yourself as you set up your KiwiSaver savings. Our KiwiSaver Health Checker tool helps you understand how to answer these questions.
Despite its name, KiwiSaver is an investment not a savings product. Our glossary will help you understand some of the technical terms used to explain KiwiSaver.
KiwiSaver providers have an obligation to clearly explain KiwiSaver so ask questions about anything you don’t understand.
Other help is available:
Review your KiwiSaver account at least once a year. The ideal time to do this is when you receive your annual member statement.
This shows money that has gone in and out of your KiwiSaver account in the past year.
Money going in includes all contributions received from you, your employer and the Government.
Money going out includes tax, the fees you pay your provider and any withdrawals you’ve made during the year – for a new home or hardship.
Your statement also provides the information you need to make sure your account is correct and you’re on track with your retirement savings.
When reading your statement, check:
All managed funds (including KiwiSaver) must give you a copy of their annual report, or a link to it on their website, within six months of the end of their financial year.
The annual report describes any changes made to the scheme in the last year, how it’s being managed, how investments have performed against the scheme’s goals, and if the auditor has raised any concerns. It also gives details of the size of the scheme’s membership, total funds invested and investment returns.
In addition to the annual report, KiwiSaver funds issue a quarterly fund update and an annual update. Fund updates give details of how each individual fund has performed, what it’s costing you and other key information. You’ll find fund updates on your provider’s website, or on Smart Investor.
This is a normal part of investing and reacting by making changes when the value is low will often make things worse.
Our KiwiSaver risk quiz gives you some great tips on how to manage your investments when markets get choppy.
KiwiSaver providers offer a range of different types of funds. You can invest in more than one type of fund at once, and you can also change your fund at any time.
If you’re not sure about changing funds, you can leave your savings in the current fund, but ask for new contributions to go to the new fund. This can be a good idea if you are changing because you are nervous about volatility.
You can change your KiwiSaver scheme provider whenever you like, but you can only have one KiwiSaver account at a time.
You should not be pressured to join any particular KiwiSaver scheme. Be wary of KiwiSaver schemes being sold as part of a bundle of other services, with a special offer attached, or through door-to-door sales. Here are five questions to ask yourself before changing your KiwiSaver provider. If you've felt pressured to sign up for KiwiSaver, please let us know.
If you are a New Zealander wanting to transfer money you have saved in a private or workplace superannuation scheme into a KiwiSaver scheme, you need to check the following:
Once your money is in KiwiSaver, it is locked in until you qualify for NZ Super (currently 65), with a few exceptions. This may not be the case with the money in your private or workplace savings.
If you would like advice about transferring, you should talk to an authorised financial adviser. You can also contact IRD.
If you have superannuation benefits overseas, see transferring overseas superannuation.