This article was published on 20 November 2010. Some information may be out of date.

How to get more out of KiwiSaver

About 40 per cent of people in KiwiSaver don’t know what kind of fund — conservative, balanced or growth — their money is invested in. Many of those won’t be in the best fund for them.

This is one of several findings in recent Inland Revenue research that suggest people are not making the most of KiwiSaver.

Most of the 40 per cent will be in one of the six default funds, which have around 20 per cent of their money in shares — or sometimes shares and a bit of property — and the rest in less risky bonds and cash.

This is not a bad mix if you are within, say, five to eight years of spending the money in retirement or on a first home. For others, though, it’s probably too conservative. Over the long term, a fund with more shares and property is likely to give them considerably more growth.

Some other findings:

  • Some people appear to be chasing short-term returns, switching to a fund that has recently reported high returns. This is a fool’s game. Lots of research shows that last period’s best fund may not do at all well in this period. In fact, there’s some indication it’s likely to do worse than average.
  • Common reasons for choosing a provider included financial security, good reputation and clear communication — which are all important. But I was disappointed to see “financial advantages” was a less common reason.

I assume financial advantages would include low fees, and this should loom larger in people’s decisions. Fees make a big difference to long-term growth. Given that we can’t predict performance, it’s a good idea to decide which asset mix is best for you — out of shares, property, bonds and cash — and then find an appropriate fund with low fees.

The KiwiSaver fee calculator on will give you a good idea of which providers charge lower fees.

  • Only 12 per cent of respondents had decreased their contribution rate since joining KiwiSaver. I had expected more employees to drop their contributions from 4 per cent of pay to 2 per cent since the minimum decreased in April 2009.

Some people like the fact that KiwiSaver money is tied up. But if you would like to maintain flexibility but still keep saving 4 per cent, you could switch half the money into a more accessible fund. Many KiwiSaver providers offer similar non-KiwiSaver funds from which you can withdraw money whenever you want to.

  • Only 63 per cent of KiwiSavers eligible for the maximum $1043 tax credit — because they had been in the scheme for more than a year — received the maximum this year. The others had not contributed $1043 themselves.

That’s a pity. Try to get $1043 into your account in each July-to-June year. The matching tax credit doubles your contributions, which means twice as much money in retirement.

  • Of the 44 per cent of KiwiSavers who have never owned a home or don’t currently own one, three quarters know about first home withdrawal and 40 per cent about the first home subsidy. I would have hoped for higher numbers.

KiwiSaver is clearly the best way to save for home ownership. After three years, you can put not only your own savings but also employer contributions and all returns — interest and so on — into a first home. The government’s money stays in your account for retirement. Also, if you — or you and your partner — earn less than $100,000 and you buy a cheaper home, you may be eligible for a subsidy of $3000 to $5000 per person. See

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Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.