Many New Zealanders view KiwiSaver as a savings account when really it’s an investment portfolio.
Find out how to get the most out of your KiwiSaver so you can save for the future you want.
Select the right KiwiSaver fund
There are five main types of KiwiSaver funds:
- Aggressive
- Growth
- Balanced
- Conservative
- Defensive
The value of riskier funds tends to fluctuate more, but over long periods these funds tend to provide the biggest returns. Head over to Sorted’s fund finder facility to learn more about the different types of funds.
If you were automatically enrolled into KiwiSaver and never actively selected a fund, your money would have been invested into a default scheme with one of the nine government-appointed default providers. These funds are meant to be temporary parking spaces while members seek advice on the appropriate fund for their risk profile.
All the default KiwiSaver funds are conservative funds, so if you’re still some way off from retirement you may want to consider switching to a growth fund that’s likely to deliver higher returns on your money over the years.
Track your KiwiSaver account
Don’t know who your KiwiSaver provider is? Contact Inland Revenue to find out.
Your KiwiSaver provider should be sending you regular statements. It’s always worth visiting your KiwiSaver provider’s website and registering online so you can log in to check your account balance and investment returns.
To keep track of the KiwiSaver contributions that you and your employer have paid to Inland Revenue, simply register for My KiwiSaver on the KiwiSaver website.
Check your prescribed investor tax rate
There are three prescribed investor rates: 10.5%, 17.5% and 28%.
You might be paying more tax than you need to. Work out your correct prescribed investor rate on the Inland Revenue site, and check your current rate with by logging into your KiwiSaver account. If it’s incorrect, notify your KiwiSaver provider or financial adviser immediately.
Find out what fees you’re paying
KiwiSaver providers charge different fees for managing your account. KiwiSaver fees come in two forms: a flat membership fee (ranging from $0 to $60 a year, averaging around $32) and a percentage of your account balance.
When you first join KiwiSaver, the fixed fees have a big effect because your account balance is lower. This reduces over time as your KiwiSaver balance grows. The percentage fee usually has a significant overall effect, particularly over a long period of time.
Increase your KiwiSaver contributions
Contributing more to KiwiSaver is a great way to boost your KiwiSaver balance. Raising your KiwiSaver contribution rate to 8% from 3% or 4% could give you hundreds of thousands of dollars more in retirement. Most of that money will likely come from market gains over the years, so the more you put in and the more time it has to grow, the more you’ll have thanks to the power of compounding interest.
At the very least, it’s worth putting in at least $20 a week, or $1,043 a year (between 1 July and 30 June). This way you’ll get the full government contribution – that’s a free $521 straight into your KiwiSaver account!
If you’re working, earning $34,762 or more and contributing at least 3% of your pay, you’re all set to receive the full government entitlement automatically. If you’re earning less than that, you’d need to top up to qualify for the full $521.
Transferring your other super funds into KiwiSaver
If you have money saved in a different workplace superannuation or overseas scheme, you may be able to transfer it into your KiwiSaver account. Contact you superannuation scheme and KiwiSaver provider to find out more.
This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.
