KiwiSaver is a voluntary, work-based savings scheme, introduced to help New Zealanders save for retirement. KiwiSaver has been designed as a long term savings plan with funds generally inaccessible until retirement age (currently 65) or for five years - whichever occurs later.

Benefits of KiwiSaver membership

On joining, your KiwiSaver receives a one off kick-start payment from the government of $1,000.

For each $1.00 you contribute into KiwiSaver each year, the government will contribute $0.50 up to a maximum of $521 per annum. This payment is referred to as a Member Tax Credit and is paid once a year, around July/August.

Employees must make minimum contributions of 3% of gross income. Employers are also obliged to pay a contribution of 3%, with the employer contribution subject to Employer Superannuation Contribution Tax (ESCT). Contractors/self-employed are able to agree an annual contribution amount with their KiwiSaver provider, rather than pay a set percentage of gross income.

Preferred KiwiSaver provider

There are differences in the terms, conditions and fees of the main KiwiSaver providers. We typically recommend the Fidelity Asset Class Kiwi Funds for the following reasons:

The Asset Class Kiwi Funds have been constructed on evidence based investment principles that eliminate forecasting and active management investment practices.

The underlying investments are well diversified, low cost, and aim to capture identified sources of higher expected long term returns (including the additional expected return from owning small and value companies).

These funds most closely resemble our recommended asset class investment philosophy.

A 2013 study by the Auckland Centre for Financial Research, entitled “On the Performance of KiwiSaver Funds”, analysed 19 KiwiSaver funds from 16 providers. These were all actively traded growth/equity funds and the findings of the study included the following comments: 

“We find that none of the KiwiSaver funds in our sample exploit the well-known ‘size effect’ by exposing their fund to small cap, or the ‘value effect’ by exposing their fund to value stocks...”

Note: the Fidelity Asset Class Kiwi Funds were launched in December 2012 and were not included in this study.

The fund has transparent fees and no performance based fees. Total Expense Ratios are in line with most major KiwiSaver providers.

Grosvenor Investment Management Limited, the manager and issuer of the scheme, is New Zealand owned and controlled. It is one of the largest KiwiSaver providers that is not owned by an Australian bank or insurance company.