With over $4 billion in default KiwiSaver funds, many New Zealanders are in the wrong KiwiSaver fund

Written by

Experts are encouraging investors who have not actively chosen which KiwiSaver provider and fund to invest their money into to do so.

Government changes come in next July and will impact a variety of different aspects of KiwiSaver. And some of these changes will impact people in default funds. 

The 2020 KiwiSaver Annual Report released figures about different aspects of KiwiSaver. The report says approximately 690,000 Kiwis were in conservative default KiwiSaver funds after being automatically enrolled when they started a new job. But as of 31 March 2020, 381,034 haven’t actually made an active choice to stay there.

These 381,034 members held over $4 billion in their accounts. And this $4 billion is sitting with one of the nine default KiwiSaver providers.

One might suppose that many of these members are not actively contributing to their KiwiSaver accounts, however, 184,524 members in a default scheme were contributing. There were 1.81 million contributing members at the end of the last KiwiSaver year.

Earlier this year, the Government changed the rules regarding KiwiSaver investment. This meant that from July 2021, investors with their money in a default fund will have their money invested in a balanced fund as opposed to a conservative fund.

This will be good news for investors in default funds because, over the long-term, their money will be invested into more high-returning investments such as shares. 

However, other investors will find themselves in the wrong fund for their circumstances. For example, for those investors looking to use their KiwiSaver funds to buy a first home in the next few years, a balanced fund will be too volatile.

“It is important that all KiwiSaver members are in the right KiwiSaver fund for their situation,” said National Capital director, Clive Fernandes. “The longer these members stay in a fund that is not right for them, the more they could lose out on extra returns or expose themselves to unnecessary risk.”

Some members in a default fund may not know how to check who their KiwiSaver provider is. They can find out by looking at their email communications, annual statements, or by logging into the IRD website. 

What's the reason not to get advice on you KiwiSaver account? Let National Capital help.

You may also like

It’s time for your annual KiwiSaver Health Check

The Financial Markets Authority (FMA) recently released a statement reminding Kiwis that now is a good time for your annual

Balancing Your KiwiSaver: Mixing Ethics with Smart Money Moves

Balancing your KiwiSaver ethically and financially involves a lot of consideration to find a middle ground.

Baby Boomers Tapping into KiwiSaver Savings: Implications and Trends

We research what's causing the sudden rise in baby boomers withdrawing their KiwiSaver savings and how this is due to

Can employees opt out of KiwiSaver?

Opt out of KiwiSaver within 2-8 weeks using the KS10 form. Employers assist, late opt-outs may be considered up to

How is KiwiSaver treated in divorce?

Navigate KiwiSaver in NZ divorces. Learn about the 50:50 split, prenuptial options, and valuation for fair asset distribution. Legal guidance

ASB Bank Launches New Aggressive KiwiSaver Fund to Meet Growing Investor Demand

Discover ASB Bank's Aggressive KiwiSaver Fund for high-growth needs. Feeling lost in the investment maze? Navigate with ease using National