Advice matters
Key KiwiSaver facts to know

With over three million members (source: IRD), KiwiSaver has fast become one of the most common financial tools in New Zealanders’ toolbox. But how well do you know the scheme?

In this quick guide, our SHARE financial advisers share some key KiwiSaver facts – good food for thought for those who’d like to make the most of it.

KiwiSaver members are investors

Don’t let the name throw you off: KiwiSaver is designed to save for retirement, but it’s not a savings account. It’s a managed fund investment that goes up and down in value, and has risk associated with it. That’s why it’s important to choose a KiwiSaver fund and provider that’s aligned with who you are – your goals and your risk profile.

For more on this, check out our guide “Why get advice before KiwiSaver decisions?”.

Benefits that are unique to KiwiSaver

As financial advisers, we are often asked: Is KiwiSaver worthwhile? The answer entirely depends on your situation; you might use KiwiSaver in combination with other tools, on its own, or even not use KiwiSaver at all. The important thing is to have a plan for your financial future, based on your needs, goals, and circumstances.

What’s certain is that KiwiSaver comes with some pretty unique benefits, compared to other investment types. These perks include:

  • Employer contributions: If you’re aged 18 to 64 and employed, your employer also contributes to your KiwiSaver account by at least 3 per cent of your gross wage or salary. It may not sound like much, but it can really make a lot of difference in the long term.
  • Annual Government contributions: Each year, if you’re aged between 18 and 64, the Government will also boost your KiwiSaver by up to $521.43. In short, for every dollar you put in during the KiwiSaver year (from 1 July to the following 30 June), the Government adds another 50 cents to your account, up to a maximum of $521.43. So, to maximise your Government annual bonus, you’ll need to put in at least $1,042.86 between July and the following June. With KiwiSaver, literally every dollar counts – and the more, the merrier.
  • First-home withdrawals and first-home grants: If you’ve been invested in KiwiSaver for at least three years, the scheme may also help you buy your first home, through a first-home withdrawal,a first-home grant or both. Terms and conditions apply, so if you’d like to understand a little more about this opportunity, please don’t hesitate to contact us.

What if you don’t know where your money is invested?

We quickly mentioned that KiwiSaver is an investment tool, and how important it is to select a fund that’s right for your situation. So, what if you’re not quite sure where your KiwiSaver funds are?

It’s easy to find out, either by logging into myIR or by contacting Inland Revenue directly.

The thing is, if you don’t remember ever choosing a fund – you might be invested in a default KiwiSaver fund. In short, people who don’t make a choice when they join the retirement savings scheme are allocated to a KiwiSaver default fund. They’ve always been intended as a ‘transitional parking space’ for KiwiSaver members, with the expectation that over time they would make active choices about their fund.

Up until 1 December 2021, all default funds were conservative (low risk) funds. This was unlikely to be an appropriate level of risk for most members, which meant many may have missed out on potential growth opportunities.

Starting December 2021, all default funds are now balanced funds: being higher risk than conservative funds, but lower risk than growth or aggressive funds, they’re probably suitable for a larger pool of investors. But it may not be suitable for you. For example, if you’re not planning to access your KiwiSaver funds within the next five to ten years, you may be able to take a higher level of risk.

Once again, get in touch to learn more. And if you’d like some additional information on the recent ‘default’ shake-up and the steps to take, have a read of our article here.

Need help?

Looking for ways to make the most of your KiwiSaver? Get in touch today. Our SHARE advisers can help you assess where you’re at, identify where you want to be, and put a plan in place to get there.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.