Your complete guide to New Zealand's national and voluntary retirement investment scheme, KiwiSaver

What is KiwiSaver?

KiwiSaver is a voluntary savings initiative to help you invest for retirement, or to assist you purchase a first home. KiwiSaver Schemes are managed by private sector companies called KiwiSaver providers. You can choose which KiwiSaver provider you invest your money with, and while you can switch between providers you can only be a member of one scheme at a time.

Who Can Join KiwiSaver?

You don't have to be employed to join KiwiSaver, but you do have to be:

  • A New Zealand citizen, or entitled to live in New Zealand indefinitely
  • Living in New Zealand, or normally living in New Zealand

Find out more about who can and can’t join KiwiSaver on the Inland Revenue KiwiSaver website.

How Does KiwiSaver Work?

How You Make Kiwisaver Contributions

For most people, KiwiSaver is work-based. This means you'll receive information about KiwiSaver from your employer, and KiwiSaver contributions will come straight out of your regular pay.

  • If you choose to join, contributions are deducted from your pay at the rate of either 3%, 4%, 6%, 8%, or 10% (you choose the rate) and invested for you in a KiwiSaver Scheme.
  • If you’re automatically enrolled you can ‘opt out’ (leave KiwiSaver), but only between two and eight weeks of starting the job. Once you join you must contribute for at least 12 months. After being a KiwiSaver member for 12 months you can take a break from saving (called a ‘savings suspension') or carry on.

If you're self-employed or not working, you can contribute directly to your particular KiwiSaver Scheme investment provider. These are called voluntary contributions, and anyone who is self-employed or not working is usually well-served by contributing at least $1,043 each year to obtain the annual government contribution, described below.

How Do KiwiSaver Scheme Investments Work?

When you make a contribution to your KiwiSaver Scheme, that money goes into a pool with the contributions made by everyone else invested in the same fund choice. Those pools of money are then invested into a combination of bonds, cash, shares, listed property, and other assets depending on which fund you're invested in.

KiwiSaver funds are a type of portfolio investment entity (PIE). A PIE fund is a type of New Zealand managed fund that invests the contributions from investors in different types of investments.

How Is Your Kiwisaver Scheme Investment Taxed?

You pay tax on the income you receive before it is paid in to KiwiSaver, then there are special tax rules that apply to the investment return earned by PIE funds.

For tax reasons PIEs were created in 2007, following the introduction of KiwiSaver. Before then, New Zealand tax laws meant that investors in managed funds could find themselves paying more tax compared to if they had invested directly in shares, which was a disincentive to investing in managed funds and would have discouraged people from joining KiwiSaver.

The PIE rules mean that investors pay tax on their own tax rate (the Prescribed Investor Rate or PIR), which is usually slightly lower than their income tax rate.

How Do You Join Kiwisaver?

KiwiSaver is a voluntary savings scheme in New Zealand. If you are 18 or above and start a new job, you’ll be automatically enrolled in KiwiSaver, with a few exceptions. You have eight weeks to decide whether or not you want to join KiwiSaver. If you do not wish to join, you can opt out.

If you are not auto-enrolled, you can join KiwiSaver by asking your employer or by applying directly to a KiwiSaver Scheme provider.

When the IRD get your deduction details from your employer, the will allocate your KiwiSaver Scheme investment to either:

  • One of the default KiwiSaver providers, or
  • Your employer’s chosen scheme if they have one.

You can choose to change the scheme you belong to at any time. Just contact your preferred scheme provider and they'll arrange for you to transfer into their scheme.

If you're not already a KiwiSaver member, simply get in touch, it would be the pleasure of our team to help you enroll.

What Are the Benefits of KiwiSaver? Is KiwiSaver Worth It?

KiwiSaver is a hassle-free way to invest regularly, and several great benefits make KiwiSaver a ‘must-have’ component of any wealth creation plan. The key benefits are:

  • Annual government contribution of up to $521 per year, subject to member contributions of at least double this.
  • Regular contributions from your employer, if you're an employee.
  • You can withdraw your funds to put toward the purchase of a first home, subject to conditions.
  • If you’re employed, your contributions come out of your pay before you see them, making investing easy.
  • If you change jobs or leave work, KiwiSaver stays with you.
  • Many people are also eligible for additional funding toward the deposit on their first home.

How to Choose Your Kiwisaver Scheme Provider

How well an investment in KiwiSaver performs will depend on the skill of the manager running your fund (including how the fund is structured if the fund is one of the few passively invested KiwiSaver Schemes), the performance of the underlying investments held by your fund, and the fees charged.

Most New Zealanders give little thought to which KiwiSaver Scheme they’re in, often staying in a default scheme or simply sticking with their bank scheme so they can see their scheme when they log in to online banking. Believe it or not, here at Become Wealth we most often suggest people not check KiwiSaver balances regularly, such as when they log in to online banking, and instead keep in mind KiwiSaver is a long-term investment which will occasionally go down in value - unlike a bank savings account it may be displayed alongside.

Crucially, not making an active choice about which KiwiSaver Scheme you use could cost you hundreds of thousands of dollars before you reach retirement in unnecessary fees, underperformance, or both. While there are no guarantees about future performance, choosing your own provider ensures you can make the most of KiwiSaver by investing in a scheme which:

  • Is well-managed
  • Has reasonable fees
  • Is well-invested
  • Has investment options suitable for your needs
  • Invests ethically and responsibly
  • Has a track record of strong performance, noting that past performance doesn't guarantee future returns

As we’re not a fund manager and aren’t owned by a KiwiSaver provider (unlike some financial advice firms!) we work with a variety of KiwiSaver providers and can compare the performance of nearly all of them. This means that we can check your existing investment without bias and, depending on your personal circumstances, can find an alternative that suits you.

Are There Disadvantages of KiwiSaver?

While KiwiSaver has some great benefits, making a minimum contribution a 'no brainer', the disadvantages below mean that most people shouldn’t invest more than the minimum into KiwiSaver. Instead, as a complement to KiwiSaver, it’s nearly always a great idea to have other investments which can be more easily accessed. This is where a trained professional can advise you on the best investment options for your situation, so you can achieve your financial goals while staying flexible.


Strict withdrawal criteria mean that KiwiSaver Scheme investments will generally be inaccessible until:

  • You're eligible for New Zealand Superannuation, or
  • you buy your first home, or
  • a limited range of other criteria are met. Call or email us for more details.

This means KiwiSaver doesn’t consider varying situations you may be in, and whether this is the best form of investing for your individual needs. For example, if your focus is to save for your children’s education, then KiwiSaver is clearly the wrong model. There are plenty of other investment funds to choose from that achieve the same compounding investment return without being locked away.

You Can Only Be a Member of One KiwiSaver Scheme at Any Time

When an investment passes a certain threshold of value, we typically recommend investing with a range of different investment managers. This is to avoid ‘concentration risk’, or the risk of one investment manager underperforming over a period of time. While concentration risk isn’t a problem for most KiwiSaver members yet, as most balances are reasonably modest, an investment approach which spreads risk between different investment managers is currently only possible with select KiwiSaver Schemes.

KiwiSaver Misconceptions

There are still many misconceptions about KiwiSaver. One of these is that the government guarantees any investment made into KiwiSaver. While the government regulates KiwiSaver providers and helps administer KiwiSaver, the government does not guarantee returns for KiwiSaver investments. This means any investment you make in KiwiSaver is made at your own risk. Arguably, this is actually a significant advantage, as it means that not only should you take an interest in a KiwiSaver Scheme investment (as you should with all investments), but it also stops KiwiSaver providers from taking undue risks - which many surely would if the government was there to reimburse any losses when they made a mistake!

KiwiSaver Changes as the Result of Different Government Policies

Investments in KiwiSaver are subject to the KiwiSaver Act of 2006. As is the case with most pieces of legislation, this act has been changed with successive governments. In general terms, the more years there are to pass before you retire, the higher the likelihood that there will be more changes to KiwiSaver by different governments led by a succession of different politicians.

Specifically, to date, a number of the financial incentives originally designed to encourage people to use KiwiSaver have since been modified or removed. The eligibility age for New Zealand Superannuation has also been increased, which increases the age people must reach to access a KiwiSaver investment.

KiwiSaver Complacency

Your entry age, who you choose to place a KiwiSaver Scheme investment with, your contribution rate, and the type of fund you choose can all have massive effects over the long term. Many New Zealanders are simply sleep-walking towards retirement, and have no idea how much they might need for their retirement nest egg.

Kiwisaver Is Not Enough

KiwiSaver is an effective long-term investment option. However, many New Zealanders mistakenly believe they'll have enough savings for retirement just because they're a KiwiSaver member. This is not true for most people, as KiwiSaver is just one part of a larger strategy for building wealth.

Kiwisaver for First Home Buyers

If you’ve been a member of KiwiSaver for three years, you may be eligible to withdraw most of your investment for the purchase of your first home. This withdrawal can make a substantial difference to the size of your deposit.

Learn more about buying your first home, including what may be available to you through KiwiSaver and the KiwiSaver First Home Grant.

What Next for Your Investment in KiwiSaver?

For a complimentary and obligation-free consultation with a financial adviser to discuss how KiwiSaver can best help you create wealth, or to discuss anything else, leave your details below and we'll be back in touch within a working day.

Thank you for reaching out! One of our colleagues will be in touch within one working day.

Talk soon!

Oops! Something went wrong while submitting the form.