Switching KiwiSaver Providers or Funds? What to Think About

If you’ve been thinking about switching KiwiSaver provider or funds, there are a couple of key questions to consider before you make the change. Canstar breaks them down.

It’s simple to switch between KiwiSaver options, far easier than a lot of New Zealanders might assume. There are two moves you might be considering:

  1. Moving to an entirely different KiwiSaver provider
  2. Staying with the same provider and changing to a different KiwiSaver fund

Whichever option you choose, make sure you thoroughly compare the many KiwiSaver options on the market before making any decisions.

Changing providers

Changing providers doesn’t take long. You can change your KiwiSaver scheme provider at any time. To make a move, you need to apply directly to the provider of the scheme you want to join. Your new provider arranges the transfer of your savings from your old scheme to the new one. The process takes about two weeks, but your old scheme provider may charge you a transfer fee, so check this with them.

Good reasons to swap providers:

  • It offers a better service with better communication than what you’re currently receiving
  • It charges lower fees for funds with a similar level of risk to what you’re currently with 
  • If your current KiwiSaver provider has consistently made returns well below average over a long period of time (however, don’t choose a new KiwiSaver based on high returns alone, as these go up and down)

Not so good reasons to swap providers:

  • If you’ve been recommended to change to a new provider, but this recommendation has come from someone who will benefit if you swap (e.g, a bank or adviser)
  • If you’ve read that another provider’s fund/s have been making far higher returns than your current provider. These could just be based on short-term returns
  • If your bank is pressuring you to swap to their scheme

Do your research, and always check whether your new provider’s fees, services and investment options actually suit you.


Changing your fund 

If you’re thinking about changing your fund with your current provider, think on these points:

Good reasons to swap funds:

  • If you’re planning to withdraw funds for a first home soon, or are close to retiring, and want to move to a lower-risk fund to lock in your funds and reduce the chances of any big losses
  • If you are in an automatically chosen default fund and you want more control and say in your investment. Know that, currently, all default funds are conservative. However, from June 2021, all new default KiwiSaver accounts will be placed into balanced funds
  • If your fund’s constant ups and downs stress you out too much and you’re considering moving to a lower-risk fund
  • If you’ve decided you are comfortable with more ups and downs in your balance and you want a potentially higher return from a riskier fund

Not so good reasons to swap funds:

  • If you’ve read that another fund from your provider has been making higher returns than your current fund. Be aware that returns aren’t always consistent, and you could be chasing after a train that’s already left the station
  • You’ve been told by a friend to swap your fund because they are making better returns in a different fund. Know that the fund you choose is specific to your life and choices, what suits one might not suit another

Also, it pays to know that some KiwiSaver providers will let you invest in more than one of their funds, so you could actually spread your money across multiple funds. 


Final thoughts

The moral of the story: know who your provider is, what they offer, and check-in with whether the fund still suits your life stage. Think about your investment timeframe; are you nearing retirement, or is it years away?

Essentially the key thing to consider when deciding which type of fund to be in is knowing how long you have to invest, then think about how much risk you’re willing to tolerate.

Know what’s out there in NZ, have a good hunt around and start by comparing KiwiSaver providers. Use Canstar’s comparison tools, they’re helpful and free to use. Our latest report also highlights the best-value providers and schemes on the market. Just click below:

Compare KiwiSaver providers for free with Canstar!

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