Every year from April to June, New Zealanders receive their annual KiwiSaver statements by post or email. Your statement has lots of information about your KiwiSaver account, including the type of fund you’re in.
Am I happy with the amount of money I’ll have in my KiwiSaver at 65?
Can I afford to contribute more?
Am I in the right KiwiSaver fund?
Am I getting good value from my KiwiSaver provider – do their fees seem reasonable?
Your KiwiSaver statement includes how much money you’re projected to have at age 65, and what that means as a weekly payment spread out over 25 years.
The figures are not a guarantee but are an estimated projection to help you make important decisions about your KiwiSaver savings.
If you don’t think your projected balance will be enough to give you the kind of retirement you want, you could consider:
If your balance has dropped or it’s not what you’re expecting, don’t panic. KiwiSaver is designed for the long-term - markets go up and down and this is a normal part of investing. History shows us that markets can and do come back but it might take time. There are a few things you can do to increase your nest egg.
Increasing your contribution makes the most dramatic difference to your KiwiSaver balance. Even a small increase in your regular contribution can make a big difference to your results long term. Contributing a minimum of $1042 by June 30 each year makes people eligible to receive the government contribution of $521. It works out to just $20 per week to meet the minimum contribution.
The main fund types are Growth, Balanced and Conservative.
Growth funds are designed to maximise your returns and are generally best if you have a long time until you need your money. Your balance might move around a bit, but the long-term nature of the investment means you have time to recover from market falls. You need to be comfortable if you see your balance rise and fall – even by big amounts – and not be tempted to switch into a lower risk fund.
Balanced funds sit in the middle — a balanced fund is one that’s less volatile than a growth fund but more likely to grow in value over the longer term than a conservative fund.
Conservative funds have lower, more predictable returns and are best if you are wanting to access your money – for retirement or a first home – in the next few years.
To find out more about the different types of KiwiSaver funds, see our Spotlight on Funds series.
Choosing the right fund is important because it can make a big difference to your savings long term.
For example, let’s say over your entire career you earn an average of $60,000 a year – being in a growth fund (if it’s a good fit) instead of a conservative fund could give you $133,000 more by age 65. *
Switching to the right fund for you can make many thousands of dollars of difference.
If you’re young, a growth fund is probably best, because these funds have the best returns over the long term.
The exception might be if you’re looking to use your KiwiSaver money to buy a house soon. In this case, you might not want your balance to jump around too much because you need to use the money for a deposit.
* Details for this example can be found at Sorted.org.nz
It’s quick and easy to change your KiwiSaver fund type and usually, you can do it for free on your KiwiSaver app or online. Changing funds doesn’t mean you have to put in any extra money to your KiwiSaver, your contributions can stay the same.
Your KiwiSaver provider – which might be a bank or fund manager – will have these different kinds of funds already on offer, so you won’t need to switch provider unless you really want to.
Give your KiwiSaver settings a quick review with this easy flow chart.
What’s the difference between a provider and a fund?
A provider provides a management of the fund you are in. So your provider would be the name of the company where you have your KiwiSaver. This can be a bank or a fund manager.
A fund is the vehicle where your money is invested. Your money will be invested alongside a lot of other investors in the same fund. In KiwiSaver they usually have names like 'growth', 'balanced' and 'conservative.'
Fees are what you pay to the fund manager for manging your KiwiSaver. Your statement will show how much you’ve paid in fees in dollars. It’s worth keeping an eye on the fees you pay because, although the fees don’t change in percentage terms, they will increase in dollar terms as your balance grows.
If you’re not happy with your current provider, Sorted has an online fund finder. KiwiSaver fund finder » Sorted