KiwiSaver

KiwiSaver providers are hoping this is the year that politicians can work together on a better future for the retirement savings scheme.
It is shaping up to be an election issue.

National has promised to increase contribution rates to 6% for both employees and employers if it is returned to government. In his State of the Nation speech in Auckland yesterday he named KiwiSaver as one of National's key election planks going into this year's election.

NZ First has proposed a 10% contribution rate and to make the scheme compulsory, offset with tax cuts.

Pie Funds chief executive Ana-Marie Lockyer said she wanted to see genuine cross-party collaboration this year and a shared commitment to long-term success for KiwiSaver.

“That includes agreement to support a build on of the staged increases already signalled in party policies, giving New Zealanders confidence that the system will remain stable, predictable and focused on improving retirement outcomes rather than short-term politics.”

At ANZ, managing director of funds management Fiona Mackenzie had a similar hope.

“New Zealanders benefit most when KiwiSaver settings are stable and focused on the long term,” she said.

“A cross party commitment to a gradual, well signalled increase in contributions would give people confidence that the system is evolving in their best interests, without being exposed to political cycles. Once that pathway is agreed, the real strength comes from staying the course and allowing compounding investment returns to work for all New Zealanders.

“And this isn’t just about what government can do. It’s also about what each of us – providers, employers, and KiwiSaver members – can do to help more New Zealanders build the kind of life they want after 65. For example, at ANZ we continue making KiwiSaver contributions for employees while they’re on parental leave so that ‘carer gaps’ don’t become ‘retirement gaps’. Actions like this, alongside good long term policy settings, can make a meaningful difference – particularly for women – and help ensure more New Zealanders are set up to thrive in retirement.”

Dean Anderson, founder of Kernel, said politicians needed to stop listening to the “legacy end of town”.  “Politicians need to stop stuffing it up and start engaging with innovators like Kernel who are actually driving the industry forward.”

He said more should be done to help the roughly one million New Zealanders who were enrolled in the scheme but not regularly contributing. “KiwiSaver is a major life investment for most of us; it’s time we gave it the focus and consideration it deserves.”

Koura founder Rupert Carlyon said he would like to see real incentives for people who saved in KiwiSaver. That could be paid for by means-testing NZ Super, he said.
“Basically moving very quickly to an Australian system.  The beauty about means testing is it does not need a long transition period, it can be done on day one which then means that we can realise cost savings immediately.”

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.”