How to Sort Out Your KiwiSaver

Ensuring you’re in the right KiwiSaver scheme and fund now can make a huge difference to your retirement nest egg. Canstar reveals the easy steps you can take to sort out your KiwiSaver.

How to Sort Out Your KiwiSaver: In this guide we cover:

• Step 1: Think about what you want from your KiwiSaver
• Step 2: Check your contributions
• Step 3: Check your fund
• Step 4: Look at your provider
• Step 5: Consider what you’re investing in
• Step 6: Compare your options

Step 1: Think about what you want from your KiwiSaver

Are you saving to retire, or for a first home? Does your KiwiSaver form a part of your wider investment portfolio, or are you relying on your KiwiSaver alone to provide most of your income in retirement? These factors will impact how you should manage your investment. 

Step 2: Check your contributions

The default KiwiSaver contribution is 3%. However, you can choose to contribute 4%, 6%, 8% or 10% of your salary to your KiwiSaver. Take a look at one of your recent payslips, it should tell you what your contribution rate is. 

By increasing your contribution rate, you can add thousands over time to your KiwiSaver account balance. You can talk to your employer about changing your contribution rate or fill in the necessary forms if you are self-employed.

Step 3: Check your fund

Below, is an overview of the five different types of KiwiSaver funds, plus the range of returns offered by the top-10 performers of each fund type over the last five years, according to the data on Canstar’s KiwiSaver comparison tool.

Defensive/Cash KiwiSaver funds

In terms of risk, defensive or cash funds are the safest type of KiwiSaver investments. This is because they usually hold less than 10% in growth assets, such as stocks and shares, which can fluctuate in value. Instead defensive funds hold things like cash and government bonds.

Past 5-year range of returns: 1.5%-2.2%

Defensive KiwiSaver funds: who are they good for?

Defensive funds are pretty much like putting your money in a regular savings account with a bank. You money is safe, and won’t get hit by stock market slumps, but the trade-off is that you won’t earn great returns. As you can see from the above figures, recent returns haven’t even keep up with inflation.

As such, defensive funds are ideal places to park funds that you have earmarked for use in the near future, or don’t want to risk losing. For example, if you’ve used KiwiSaver to save for a house deposit that you want to access in the coming months. Or if you’re close to retirement and have earmarked a portion of your KiwiSaver to pay off a mortgage, or to splurge on a celebratory holiday.

Conservative KiwiSaver funds

Conservative funds are, again, best suited for risk-averse investors. Their make-up is similar to cash/defensive funds: mostly invested in bank deposits and government bonds, but with a higher proportion of stocks and shares, often around a third of investments.

This extra focus on growth assets means that there’s more opportunity for slightly higher returns:

Past 5-year range of returns: 1.9%-3.5%

Conservative KiwiSaver funds: who are they good for?

As with a defensive fund, a conservative fund is generally suited to those who plan to withdraw a sum withing a fixed timeframe, or for somebody who doesn’t want to see their investments decline in value over the near term.

A conservative fund can also be a great option if you want to diversify your KiwiSaver investments and park a chunk of funds in a lower-risk fund, while still earning reasonable returns.

Balanced KiwiSaver funds

If you join KiwiSaver and don’t choose your own fund, you are assigned a default provider and fund. Currently, the default providers are:

But all default funds are balanced funds, which contain between around a third to two-thirds of growth assets (shares and property, etc). Their greater proportion of growth assets means that balanced funds have more opportunity to earn decent returns, while still playing it cautious with a fair chunk of less riskier investments.

Past 5-year range of returns: 3.5%-6.1%

Balanced KiwiSaver funds: who are they good for?

When KiwiSaver first started, default funds were all conservative funds. However, a couple of years ago they were switched to balanced funds, to ensure that people were not proactive enough to choose their own KiwiSaver funds didn’t miss out on possible long-term gains.

However, overall, balanced KiwiSaver funds are generally suited to those seeking mid-range, long-term returns, and who expect to withdraw their KiwiSaver money within the next five to 10 years.

Growth KiwiSaver funds

Growth KiwiSaver funds consist mainly of growth assets, from around 63% to 90%. As the name suggests, these funds have the potential for higher returns and balance growth. However, the downside is that they’re more prone to swings in value, as investments move up and down with the market.

Past 5-year range of returns: 5.1%-10.3%

Growth KiwiSaver funds: who are they good for?

If you’re heading into growth fund territory, then you need to have a fairly large appetite for risk. This fund type is generally suited to an investor who does not expect to withdraw their funds for at least 10 years, and isn’t worried if their balance falls during this timeframe.

When the pandemic hit back in early 2021, there was a big drop in the share market, which hit growth KiwiSaver funds particularly hard. However, those investors who rushed to switch their money into more conservative funds only crystalised their losses, and missed out on the swift market bounce-back.

Such examples of market volatility only highlight the need to focus on long-term KiwiSaver investment growth.

In the first decades of KiwiSaver membership, growth funds can be a good investment tool to really kickstart your retirement savings, or to help grow a deposit for a first home.

Aggressive KiwiSaver funds

Aggressive KiwiSaver funds are for investment thrill seekers with an extremely large appetite for risk. These types of KiwiSaver funds hold a large proportion of their investments in growth assets – at least 90% to 100%.

Aggressive KiwiSaver funds are generally suitable for investors who are in it for the long haul, and are looking for strong long-term growth. But remember, it’s important to be comfortable with watching sharp drops in your balance before you opt for this fund type.

Past 5-year range of returns: 2.2%-8.1%

Aggressive KiwiSaver funds: who are they good for?

Aggressive KiwiSaver funds are generally for investors who aren’t planning to withdraw funds for at least 10 years, and who want to apportion at least part of their KiwiSaver balance to chase the best possible returns.

However, as you can see from the returns from the top-10 aggressive funds on our database over the past five years, aggressive funds have failed to match the performance of growth funds, which highlights the risks involved.

Step 4: Look at your provider and their fees

You can choose to have your KiwiSaver with either a bank or another provider. Often we sign up as teenagers with our banks and forget about it, so make sure to check whether your provider still meets your investment requirements. Providers offer a range of investment options and product features. Some offer apps, online platforms and free help desks so you can chat about your investments. Others are more basic.

Also it’s important to check how much you are paying in fees against the returns you are earning. Ask yourself if your provider is offering good value for money. Our KiwiSaver comparison tool shows the fees and returns you can expect from each provider.

Generally speaking, you can expect to pay more in fees for funds that are actively managed, rather than passively following an index. For more on the differences between active and passive funds, check out our story: Active Investing vs Passive: What it Means for your KiwiSaver.

Step 5: Consider what you’re investing in

Some people are happy choosing schemes that maximise the returns on their investments. However, some are more concerned about where their money is invested.

If you are worried about the environmental or ethical aspects of your KiwiSaver, you’ll find details on providers’ websites about individual funds’ investments.  

→ Related article: Top Ethical KiwiSaver Schemes

Step 6: Compare your options

A great way to start comparing KiwiSaver providers and schemes is to use Canstar’s free comparison tool. Our latest KiwiSaver awards and star ratings also highlight the best-value providers and schemes on the market. To start comparing, just click below:

Compare KiwiSaver providers for free with Canstar!

How do I know if I’m already signed up to KiwiSaver?

If you’re not sure if you’re already with a KiwiSaver provider, contact Inland Revenue. If you’re a member, they will have your details on file. Call 0800 KIWISAVER, or log in to myIR to check. Make sure to keep track of your balance regularly once you’re signed up.

Compare KiwiSaver Providers with Canstar

If you’re comparing KiwiSaver 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 a Growth fund, sorted by Star Rating (highest to lowest), followed by company name (alphabetical) – some may have links to providers’ websites. Use Canstar’s KiwiSaver comparison selector to view a wider range of retirement funds. Canstar may earn a fee for referrals.

To read more about our latest KiwiSaver Awards click this link or to compare KiwiSaver providers, click on the button below.

Compare KiwiSaver funds with Canstar

About the author of this page

This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.