KiwiSaver

KiwiSaver providers are divided on whether it is appropriate for the scheme to be made compulsory.

In November, NZ First said it wanted to make KiwiSaver compulsory, and to boost the contribution from employers and employees to 10%, with a tax break to offset it.

But some providers said they were not convinced that compulsion was appropriate.

Dean Anderson, founder of Kernel KiwiSaver, said it was not the right move now.

“Membership and contribution rates are already strong among people in their 30s and 40s. The priority should be making KiwiSaver more attractive – not mandatory – by lifting contributions and incentivising participation for those not yet in the scheme.

“That means smarter settings, such as improved tax incentives, high contribution rates, or redirecting government contributions to 0–18-year-olds to drive early engagement and long term savings habits.

“We need to pull the levers that make KiwiSaver work for everyone, while preserving flexibility for different socio economic needs.”

He said financial stability would need to come first.

“Financial stability must come first. Paying down high interest debt is often a better outcome for Kiwis than being compelled into savings they can’t readily access.”

Rupert Carlyon, founder of Koura, said if it was compulsory without any additional upside being added for members, people would just see it as another tax.

“You need incentives to make people want to contribute, though we can’t afford the current retirement system so we need people to start saving more and maybe compulsion is the only way to achieve this. Compulsion will be seen, and rightly so, as a precursor to means testing [of the pension]… I see compulsion as inevitable but it can’t be done without incentives.”

But Greg Smith, investment specialist at Generate, said making KiwiSaver compulsory would ensure more people had a more comfortable retirement.

“There are currently over 3.3 million New Zealanders enrolled in KiwiSaver with total funds now exceeding $100 billion. But there are still around a third who are not contributing. Making KiwiSaver compulsory would bring over a million more people into the fold.”

He said the national appetite for an obligatory superannuation scheme was likely to have improved since the last referendum on the issue in 1997, when 91.8 percent voted against it.

“There were significant flaws with that proposal, with workers required to contribute up to 8 percent of their income, but it was primarily employee-funded and widely perceived as a pay cut.

“An initial poll conducted of our followers on social media, conducted in September, shows that a clear majority are in favour of lifting minimum compulsory KiwiSaver contributions to 10 percent.

“Perhaps no greater advertisement of the merits of a compulsory superannuation scheme, with elevated minimum contribution rates, can be seen than across the Tasman. In Australia, compulsory super is the primary retirement system, and is a pool which exceeds A$4 trillion. It has made Australia the fifth-largest holder of pension fund assets in the world. Compulsory super has been a huge factor in Australia’s economic resilience over recent decades.”

At the recent ASSET magazine round table discussion, Pie Funds chief executive Ana-Marie Lockyer said she supported compulsion but agreed there would need to be a pathway to achieve it.

ANZ managing director for funds management Fiona Mackenzie said it should be compulsory but said there would need to be affordability considerations. Some people may not be contributing because they cannot afford to do so.

The providers said there would need to be a cross-party agreement about the approach so that the issue did not become a political football.

Chris Wilson, co-chief executive of Harbour Asset Management, said there should be more attention paid to people who were not getting the benefits of KiwiSaver, such as those who were self-employed or not working.

“The superannuation cliff is only getting bigger and we're not doing things to change KiwiSaver to pick up that part of market …compulsory gets you part of the way. But actually it doesn't cover those things where you're not in the traditional workforce with an employer.”

A new tool will give advisers more information to help them make KiwiSaver decisions with their clients.

Quotemonster launched Kiwimonster Research in a beta phase in late December.

It includes additional metrics on top of its previous free Kiwimonster comparison tool, including ranking funds on a five-year performance basis within their fund class, information on the management tenure of key personnel, the scheme size, funds under management growth, service levels as rated by advisers, and tools.

Funds can also be filtered according to manager type, style or domicile.

Director Russell Hutchinson said it was the KiwiSaver equivalent of what Quotemonster did for insurance advisers.

“You can think of the content in terms of Sorted-plus, it’s everything you can find on Sorted plus a bunch of other research metrics.”

He said advisers might want the research to enable them to efficiently and accurately comment on issues such as the domicile of the fund manager, the segments of investments they were exposed to or their service levels, he said.

The data would help them compare funds that could have different fees, structures and performance over time.

Hutchinson said he expected some tension with fund mangers as the tool grew. “That’s accepted as being the case when you’re doing research.”

The tool was designed for advisers, not their clients, he said. “It’s not being made available to end clients. It’s just for advisers. We focus on the third-party advisers and are geared up for them.”

He said advisers had to be able to justify their recommendations to clients and the data would help with these conversations.

Functionality and coverage would continue to be developed through the beta stage.

New expenditure guidelines show how much New Zealanders need in their KiwiSaver to retire comfortably.

Kiwis who want the odd luxury in retirement need between $273,000 and $1.033 million on top of superannuation, according to the latest Retirement Expenditure Guidelines. For a more modest 'no frills' retirement, they would need between $118,000 and $181,000.

Financial Advice NZ chief executive Nick Hakes says advisers are more needed than ever to help New Zealanders get there.

Released by Massey University's Fin-Ed Centre, the guidelines are based on actual spending patterns of retired New Zealanders who receive superannuation. The report shows a weekly expenditure of $705-$1,780 depending on household type and location – well above what superannuation provides.

The savings gap
As of April 2025, a single person living alone receives $538.42 per week on superannuation. Total expenditure for the ‘no frills – metro’ category is $705.34. This trend extends to every type of household.

In short, everyone is spending more than superannuation would give them.

To bridge the gap, a one-person household would need to save between $71 – $218 weekly from age 25, depending on lifestyle and location. From age 50, those figures increase to $54 – $325 weekly.

A two-person household would need to save up to $406 weekly from age 25, and up to $1,230 from age 50.

At the same time, retirees are spending more on essentials. Property rates jumped 11.9% and household energy costs rose 9.1% – well above the 2.7% general inflation rate.
Hakes says that clients can often find these large numbers daunting, so they defer decision making until the last moment.

“That’s when clients and advisers say “I wish you had started sooner.” The key message is that the earlier people can start working with an adviser, the better financial position they’ll be in, and those big retirement numbers won’t be so daunting,” he told Good Returns.

“Year in and year out, the research highlights that relying on superannuation alone is not enough. Financial advisers can help calculate the savings that are needed, targets, and plans to reach it – and most importantly, how that adjusts over time as circumstances change.”

How far off-target are New Zealanders?

The report models a range of scenarios, and shows that someone who starts contributing to KiwiSaver in their 20s could still reach the ‘no frills’ target, even after a $75,000 withdrawal for a first-home deposit at age 35. However, those joining KiwiSaver in their 40s or 50s or who pause contributions for a few years have more of an uphill battle.

Hakes says that having a strategy is a starting point, but you also need to stick to the plan.

“Having the KiwiSaver is a good start, but there’s so much more to it,” he says.

“How it changes over time, whether you’re in the right fund, how the environment is impacting investment returns, etc. It’s so much deeper and broader than just “here’s the financial product.”

“We know through research that people with financial advisers are feeling more prepared and confident about retirement,” he adds. “One of the reasons we’ve signed the MOU with the retirement commission and the Sorted platform is to create a pathway from financial information to financial action.”

Bridging the advice gap

Household living costs are increasing, and KiwiSaver has seen record numbers of hardship withdrawals this year – $443.6 million, up by 51% on 2024. Hakes says that this is a concern for this industry, where withdrawals are seen as an absolute last resort.

Given the impact of a first-home deposit withdrawal, Kiwis can’t afford to take more out of their KiwiSavers early.

For advisers, there’s plenty of opportunity to educate, and a whole new generation moving towards the magical line of 65.

“Even millennials are well and truly in the workforce now,” Hakes says.

“If advisers who have been traditionally providing advice to clients who are just on either side of that 65, now is absolutely the time that intergenerational thinking needs to take place. That’s also about broadening the scope of advice, and that’s what adviser businesses should be thinking about – on a client level, a technical level, and on a business level.”

Consilium says it has seen a surge in advisers using its KiwiWRAP KiwiSaver scheme along with an increasing interest in personalised KiwiSaver advice from high-balance investors.

The KiwiWRAP scheme, available to advisers only, now has more than $200 million in funds under management.

"KiwiWRAP continues to attract investors with higher balances who are seeking tailored advice on their KiwiSaver investments. Over the past year, the number of KiwiWRAP accounts with balances exceeding $1million has nearly doubled, and the scheme’s average portfolio balance has increased from $174,000 to $188,000," the company says.

With more than 40 adviser firms nationwide offering the KiwiWRAP KiwiSaver Scheme, the market is signalling growing demand in an adviser-led KiwiSaver solution.

"Many financial advisers aren’t just recommending the scheme to their clients, they’ve invested their own KiwiSaver balances in it too."

Hamilton Hindin Greene financial adviser, Jeremy Simpson, says, “I’ve got a KiwiWRAP account myself. All our advisers have transferred their KiwiSaver to it.”

“It’s the best way to truly understand the scheme.”

That sentiment is echoed across the growing network of accredited adviser firms using the scheme to deliver better outcomes for clients, particularly those with significant balances and more personalised investment needs.

“This isn’t just a generic KiwiSaver scheme that advisers recommend, it’s one they have incorporated into their suite of advice solutions and are personally backing with their own retirement savings,” Consilium chief executive Louisa Yandle says.

“That speaks volumes about the confidence advisers have in KiwiWRAP’s flexibility, transparency and long term value as part of their business.”

With over 1,000 investors onboard, KiwiWRAP is carving out a niche in the market, giving advisers the tools to offer clients a KiwiSaver solution that aligns with their wider portfolio strategy.