KiwiSaver

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.

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.

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.

Three things will affect the fees you pay:

1. How big your KiwiSaver balance is – the bigger the balance, the greater the fee
2. The type of investment fund you’re in – generally lower-risk funds are cheaper than higher-risk funds (but remember lower-risk funds give less overall return)
3. Your KiwiSaver provider – some providers charge higher fees than other

Typical fees include:

• Management fee – pays the fund manager who decides how each fund is invested. This fee is different for each fund as some funds need more management than others. It’s calculated as a percentage of the fund’s net assets.
• Member fee – covers the administration of your personal KiwiSaver account. It’s usually deducted monthly.
• Administration fee – contributes to the administration of the scheme as a whole.
• Supervisor or trustee fee – pays the supervisor or trustee for overseeing all funds offered by the scheme and for holding the fund’s assets.
• Performance-based fee – a bonus paid to the fund manager for achieving a return that’s better than the target return. Only a few KiwiSaver managers charge a performance-based fee.

You may also be charged fees to:

• change your investment options
• transfer savings from another NZ KiwiSaver or superannuation scheme
• withdraw money from your KiwiSaver scheme.

There are three very important questions you should ask yourself as you set up your KiwiSaver savings.

This shows your current balance, and what your KiwiSaver savings may be worth at age 65. See how the projections are calculated.

It also 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.

When reading your statement, ask yourself:

1. Are you in the right fund? 
   To check whether another fund might suit you better, use the KiwiSaver fund finder tool on the Sorted website.
2. Could you be saving more?
   Use Sorted’s KiwiSaver savings calculator to see the difference increasing contributions might make for you.
3. Are you paying the right amount of tax?
   Visit the KiwiSaver website to find out how your contributions and your investment income are taxed.
4. Are you paying too much in fees?
   All KiwiSaver providers charge fees. Visit the Sorted Smart Investor tool to find out what other providers are charging.

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.