1. Take a looksee at your KiwiSaver

Take a looksee at your KiwiSaver

Take a looksee at your KiwiSaver

Are you in the right KiwiSaver Fund? KiwiSaver looksee

Every year from April to June, New Zealanders receive their annual KiwiSaver statements by post or email.  Your statement has lots of information about your KiwiSaver account, including the type of fund you’re in.

Take a looksee at your KiwiSaver statement today and check you’re in the right fund for you.

The main fund types are Growth, Balanced and Conservative.

Growth funds are designed to maximise your returns and are generally best if you have a long time until you need your money.  Your balance might move around a bit, but the long-term nature of the investment means you have time to recover from market falls.  You need to be comfortable if you see your balance rise and fall – even by big amounts – and not be tempted to switch into a lower risk fund. 

Balanced funds sit in the middle — a balanced fund is one that’s less volatile than a growth fund but more likely to grow in value over the longer term than a conservative fund. 

Conservative funds have lower, more predictable returns and are best if you are wanting to access your money – for retirement or a first home – in the next few years.

To find out more about the different types of KiwiSaver funds, see our Spotlight on Funds series.

COVID-19 switching – young people move from growth to conservative in 2020

Research commissioned by the FMA has found there was an increase in KiwiSaver fund switching last year during the height of the COVID-19 market turmoil – with young people doing it the most.

We also found that some young people were unsure about how the different kinds of KiwiSaver funds worked.

The value of switches made to more conservative funds during COVID-19 was $1.2 billion. But just $121 million was moved back to higher growth funds — meaning over $1 billion of KiwiSaver funds that had moved missed out on last year’s subsequent market rebound.

Making a hasty change to your fund can have long term consequences to your KiwiSaver – if you’re a long way from retirement then you could miss out on a lot of money in returns - so take a looksee and make sure you’re in the right fund for you.

Read more about the research in the KiwiSaver Switching report.

Shannon takes a looksee at her KiwiSaver fund choice.  She’s some way off settling down and buying a house, so she’s happy to stick with her growth fund for now.

 

Why is fund choice so important?

Why is fund choice so important?

Choosing the right fund is important because it can make a big difference to your savings long term. 

For example, let’s say over your entire career you earn an average of $60,000 a year – being in a growth fund (if it’s a good fit) instead of a conservative fund could give you $133,000 more by age 65. *

Switching to the right fund for you can make many thousands of dollars of difference.

If you’re young, a growth fund is probably best, because these funds have the best returns over the long term.

The exception might be if you’re looking to use your KiwiSaver money to buy a house soon.  In this case, you might not want your balance to jump around too much because you need to use the money for a deposit. 

For more on fund choice, see our Spotlight on Funds series or check out Sorted here "Find the right type of fund for you".

* Details for this example can be found at Sorted.org.nz

How do I change my KiwiSaver fund type? 

How do I change my KiwiSaver fund type? 

It’s quick and easy to change your KiwiSaver fund type and usually, you can do it for free on your KiwiSaver app or online. Changing funds doesn’t mean you have to put in any extra money to your KiwiSaver, your contributions can stay the same.

Your KiwiSaver provider – which might be a bank or fund manager – will have these different kinds of funds already on offer, so you won’t need to switch provider unless you really want to.

Give your KiwiSaver settings a quick review with this easy flow chart.

Getting financial advice

Getting financial advice

There’s lots of online tools to help you make decisions about KiwiSaver such as the What’s Your KiwiSaver Flow Chart and the Sorted Fund Finder, but if you feel like you need some more help, consider talking to a financial adviser. See more about getting financial advice.

Fund choice and default KiwiSaver providers

Fund choice and default KiwiSaver providers

If you were automatically enrolled in KiwiSaver you may have been allocated a default provider by the Government.  Up until this year, all default funds were Conservative.  This will change in December 2021 as the Government has made the default KiwiSaver providers invest default members’ money in Balanced funds.   If you’re in a KiwiSaver default scheme then see what the changes mean for you.

Take a looksee at your KiwiSaver statement

Take a looksee at your KiwiSaver statement

Ask yourself these questions:

  1. Am I in the right KiwiSaver fund?
  2. Can I afford to contribute more?
  3. Am I getting good value from my KiwiSaver provider – do their fees seem reasonable?
  4. Am I happy with the amount of money I’ll have in my KiwiSaver at 65?

If you don’t think your projected balance will be enough to give you the kind of retirement you want, you could consider: 

  • Switching to a more growth-oriented fund and / or increasing your contributions. Changing to a higher growth fund can be a good option to improve your long-term projected retirement balance if you can’t afford to increase contributions right now (provided you are prepared to take on additional risk). This is particularly true if you’re younger.
  • Increasing your contributions makes the most dramatic difference.
  • Talk to your KiwiSaver provider or consider getting some financial advice from a qualified adviser.

Check your KiwiSaver settings in this handy flow chart

KiwiSaver retirement projections

Your KiwiSaver statement also includes how much money you’re projected to have at age 65, and what that means as a weekly payment spread out over 25 years.

The figures are not a guarantee but are an estimated projection to help you make important decisions about your KiwiSaver savings. 

Read more about the KiwiSaver retirement projections.

Useful resources

Useful resources to help you make good KiwiSaver choices

What’s your KiwiSaver Flow?
Give your KiwiSaver settings a quick review with this easy flow chart.

KiwiSaver FAQs
Got questions about your retirement projection? Find out what you need to know here.

How do I find out my retirement projection?
You can find it on your KiwiSaver statement, or use the Sorted calculator.

Want more detail on how retirement projections are calculated?
Read more here

How much do I need for retirement?
Massey retirement expenditure guidelines, or use Sorted's retirement planner. 

Read more about how projections are calculated

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