How Safe Is My KiwiSaver: Can You Lose Your KiwiSaver?

Millions of Kiwis use KiwiSaver to help save for retirement. But how worried should you be about those funds, and could you lose them all?

For many New Zealanders, KiwiSaver is an integral part of their savings strategy, whether for a house deposit, or to carry them through a long and relaxing retirement. So it’s little wonder many people have anxiety, and wonder if they can lose their KiwiSaver.

If something were to wipe out your balance, it could put a serious hole in your future financial comfort. But should it be of concern?

Even in a volatile market, how at risk is your KiwiSaver, and how can you best manage that risk? Canstar takes a look at the safety of KiwiSaver investments, and if you are at risk of losing it at all?

In this article we cover:

Can you lose your KiwiSaver funds?
How trustworthy is your KiwiSaver provider?
What to do if you’re worried about your KiwiSaver?

KiwiSaver logo

Lose your KiwiSaver: Can I lose all my funds?

In theory, yes. But, in reality, it’s unlikely you would lose all of your KiwiSaver.

KiwiSaver is not a savings account. It’s an investment fund. The money you and your employer contribute to KiwiSaver is pooled together with other KiwiSaver members’ cash and invested into a range of securities, like stocks, property and bonds.

For this reason, your KiwiSaver balance can fluctuate. If the investments are doing well, your balance grows. If the investments fare poorly, your balance drops.

However, KiwiSaver investments are spread across assets with two different risk profiles:

  • Growth assets (shares and property) – more volatile, have the potential for large returns and large losses
  • Income assets (cash and bonds) – more stable but with less growth opportunity

These two types of assets form the basis of the five basic KiwiSaver fund profiles. Each profile comes with a different level of risk/returns:

Defensive fund

A defensive fund holds less than 10% of your investment in growth assets. Instead, it invests primarily in things such as cash and government bonds.

Conservative fund

A conservative funds hold anywhere from 10% to 34.9% in growth assets.

Balanced fund

As the name suggests, this fund is a balance between income assets (such as cash, bank deposits, bonds, and other fixed-interest investments) and riskier growth assets (around 35%-62.9%) such as shares and property. This results in a fund that has a balance of high risk-high reward investments and secure, low-growth assets.

Growth fund

Growth KiwiSaver funds hold a significantly larger proportion of growth assets: 63% to 89.9%.

Aggressive fund

Aggressive KiwiSaver funds are similar to growth funds, but with an even higher share of growth assets (90%-100%).

Because of this diversity of investments, it’s very unlikely that you’ll lose all of your KiwiSaver funds at once, especially if you’re in a defensive, conservative or balanced fund.

Even if you have all your KiwiSaver in an aggressive fund, your money won’t be invested in just one or two companies. So the risk of all your investments becoming dud overnight is very slim.

However, that doesn’t mean that if you are invested in higher risk funds you are immune from losing a considerable amount in a short period of time.

For an example, you only have to think back to the Covid-induced stock market crashes of March 2020, which saw some markets lose 20% over a single day’s trading.

Lose your KiwiSaver: How safe is your provider?

KiwiSaver is privately managed by banks and/or investment houses. And there are strict rules in place to ensure that your money is in safe hands:

KiwiSaver providers are regulated

Your KiwiSaver provider has to be licensed by the Financial Markets Authority. Each provider is audited regularly to ensure they are investing responsibly and have the best interests of investors in mind.

Your funds are held in a trust

Your KiwiSaver provider doesn’t actually hold your funds. Instead, a third-party trust holds your funds. This means that if the bank or investment house runs into financial issues, or has a Bernie Madoff on staff, it can’t just dip into the KiwiSaver funds under its control.

So even if the company in charge of your KiwiSaver goes broke, your money should be okay.

Lose your KiwiSaver: Compare Providers with Canstar

If you’re comparing superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for a KiwiSaver member with a balance of $50,000 in an Aggressive fund, sorted by Star Rating (highest to lowest), followed by company name (alphabetical) – some products may have links to providers’ websites. Use Canstar’s KiwiSaver comparison selector to view a wider range of super funds. Canstar may earn a fee for referrals.

To read more about our latest KiwiSaver Awards, click on the button below.

Compare KiwiSaver providers for free with Canstar!

Lose your KiwiSaver: What should I do if I’m worried?

We’ve had a pretty rocky couple of years, and the financial markets have reflected that. As a result, many Kiwis are feeling concerned about the safety of their finances.

However, you shouldn’t be overly concerned about your KiwiSaver. There may be some short-term volatility, but unless you’re planning to withdraw all of your KiwiSaver for a retirement splurge, or a first home deposit, in the near future, you can probably afford to ride it out.

But if you are really worried about losing your savings, take a look at your KiwiSaver investment profile and to talk to your provider about your appetite for risk and whether they recommend a move to a more conservative fund.

However, it’s worth remembering that such funds are not ideal for long-term investing, as they provide limited returns. For a more in-depth background into the different KiwiSaver funds, and which option is right for you, click here.

Lose your KiwiSaver: Compare KiwiSaver providers with Canstar

If you have KiwiSaver, the best way to maximise your returns is to take an active interest in your fund and fund provider. How do they compare with other providers in the market? And could you secure a brighter financial future by making a change?

This is something that Canstar can help your research. By using our KiwiSaver comparison tools and our expert Star Ratings, you can easily compare funds based on long-term returns and fees charged. To learn more, and to start comparing KiwiSaver funds, just click the button below:

Compare KiwiSaver providers for free with Canstar!

author andrew broadley

About the author of this page

This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.

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