Here's a statistic that surprises most people: when KiwiSaver launched in 2007, millions of New Zealanders were automatically enrolled into default funds. These were conservative funds, designed to protect your money, not grow it.
Many of those people are still in those same funds. If you're in your 20s, 30s or even 40s and still in a conservative or default fund, you're likely missing out on a significant amount of money by the time you retire.
The good news: fixing it takes about 30 minutes and costs nothing.
Why the fund type matters so much
The fund you're in determines how your money is invested, and that has a huge impact on how much you end up with.
Conservative funds hold mostly cash and bonds. They're low risk, but they grow slowly. Growth funds hold mostly shares and property. They're more volatile in the short term, but historically they grow significantly more over a long period.
The difference is dramatic. Consider two people, both contributing $300 per month to KiwiSaver over 30 years:
| Fund type | Assumed average return | Estimated balance after 30 years |
|---|---|---|
| Conservative | ~3-4% p.a. | ~$170,000 - $200,000 |
| Balanced | ~5-6% p.a. | ~$240,000 - $290,000 |
| Growth | ~7-8% p.a. | ~$340,000 - $400,000 |
Illustrative projections only. Actual returns will vary. Not financial advice.
The difference between being in a conservative fund versus a growth fund, for the same contributions over 30 years, can be $150,000 to $200,000. That's not a small adjustment, that's a life-changing amount of money.
"Being in the wrong KiwiSaver fund for 30 years doesn't feel like a mistake when you're making it. It only becomes obvious in hindsight, when it's too late to fix."
The common misconception about "high risk"
The word "risk" makes people nervous. But in the context of KiwiSaver, risk doesn't mean gambling. It means volatility, the fact that the value of your fund goes up and down in the short term.
For someone who's 10, 20 or 30 years from retirement, short-term volatility doesn't matter much. Markets go through cycles, but over long periods they've historically trended upward. A growth fund that drops 15% in a bad year has also typically grown 8-10% in good years.
The real risk for a young person with decades before retirement is actually being in a conservative fund, because the lower returns mean you end up with significantly less money, and there's no time to recover that gap.
Important exception: If you're planning to use your KiwiSaver for a first home purchase in the next 1-3 years, this changes the calculation significantly. Being in a growth fund right before you need the money can be risky, a market downturn just before your withdrawal could reduce your deposit. This is worth discussing specifically with me.
How to check what fund you're in
Most KiwiSaver providers have an online portal or app where you can see your fund type. You're looking for whether you're in a defensive, conservative, balanced, growth or aggressive fund.
If you're not sure who your provider even is, check your payslips, the KiwiSaver deductions should show the provider name. You can also log in to myIR on the IRD website, which shows your KiwiSaver details.
What to do if you're in the wrong fund
Switching is usually straightforward. You can either:
- Switch fund types within your current provider, most providers let you do this online in a few minutes. There's usually no fee and it doesn't affect your balance.
- Switch to a different provider entirely, if your current provider has high fees or limited fund options, it might be worth moving. Your balance transfers across automatically.
One thing to know before switching: If you switch providers, your government member tax credit entitlements for that year are based on total contributions to your new provider from the switch date. In most cases this doesn't cause any issues, but it's worth being aware of. I'll walk you through it.
What I actually do in a KiwiSaver review
A KiwiSaver review with me takes about 30 minutes. I'll look at your current fund type and provider, compare it against alternatives, explain what the different options actually mean for your situation, and give you a clear recommendation, with the reasoning behind it.
No pressure. No obligation. If what you have is already fine, I'll tell you that too.