Default funds have the following features:
- A ‘balanced’ investment mandate. 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.
- Low fees – typically as low, or lower than a conservative fund
- Excludes investments in some weapons and investments that are materially involved in the business of fossil fuels. For more information about these exclusions, click here to see the relevant rules that each default fund must follow
- Member engagement requirements
Default member transition
KiwiSaver default members (members who have not made an active choice to be in a default fund) will be transitioning to these new settings from 1 December 2021.
Your KiwiSaver provider and the Inland Revenue Department (IRD) are managing this change under rules set out by the Ministry of Business Innovation and Employment (MBIE). To find out more about the transition read the fact sheet available on the MBIE website.
Member engagement requirements
Since many New Zealanders will join a default fund automatically, the Government requires default KiwiSaver providers to contact members at key points to help with important decisions. You will also receive this contact if you’ve actively chosen to be in a default fund.
You should expect advice on:
- How to get your settings right when you first join KiwiSaver
- How to manage your KiwiSaver investment after you’ve withdrawn money for a first home
- What to think about 10 years and one year out from reaching 65 (the current eligibility age to withdraw from KiwiSaver)
- How to manage your ongoing KiwiSaver investment or withdrawals after you turn 65
You should also expect your KiwiSaver provider to contact you with helpful information at the following times:
- When annual member statements are distributed
- When government contribution payments are due
- During significant market volatility
- As you near the end of a savings suspension
- As you approach eligibility for a first home withdrawal
- When you haven’t made a contribution within the last 18 months without an approved savings suspension
- When you reach eligibility age (currently age 65).
The FMA monitors default providers to ensure they are meeting these requirements.