Kiwisaver 101: Supercharge Your Savings in New Zealand

Moving to New Zealand is a big step, and getting the most out of Kiwisaver is a vital part of setting up your financial future here.

Kiwisaver is a voluntary savings scheme designed to help you build wealth for retirement or your first home. At Windsor Wealth New Zealand, we’re here to help you make the most of KiwiSaver. Let’s dive into why it’s such a powerful tool and how to get it right!

KiwiSaver is like an investment on steroids. Here’s how it works:

• You contribute a minimum of 3% of your income if you’re permanently employed.

• Your employer contributes 3% as well (though this is taxed, so it’s slightly less than your contribution).

• The government adds up to $521 per year if you contribute at least $1,042 annually.

These combined contributions—yours, your employer’s, and the government’s—give you a head start. Pair that with strong investment returns, and you’ve got a savings vehicle that’s far better than a standard investment. In New Zealand, where saving can be challenging, KiwiSaver is a smart, automatic way to grow your wealth over time.

To join KiwiSaver, you need to be a New Zealand citizen or hold a resident visa or permanent resident visa, and be living (or normally living) in New Zealand. If you’re on a temporary or visitor visa, you’ll need to wait until your visa status qualifies. Unsure about your eligibility? Reach out to us, and we’ll clarify!

Your KiwiSaver funds are generally locked in until age 65, with two main exceptions:

• First-home withdrawal: After three years in KiwiSaver, you may withdraw most of your savings (except $1,000) to help buy your first home in New Zealand.

• Severe financial hardship: In rare cases, you can apply to withdraw funds if facing significant financial difficulty.

With around 40 KiwiSaver providers, picking the right fund can make a life changing difference. Many people choose their bank’s KiwiSaver scheme for convenience, but bank funds typically deliver average returns at best. To maximize your growth, you need a fund that consistently performs well over the long term.

For example, I recently worked with a client aged 40, earning $100,000 a year,  contributing 3%, with your employer adding 3% and the government contributing $521. And her Kiwisaver  balance is approx. $50,000. If her fund earns 6% per year, she’d have about $650,982 by age 65. But a fund earning 8% per year could grow to $922,968—an extra $271,986 just for choosing a better fund!

The problem? Some funds are like rollercoasters—top of the class one year, (and advertising their short term performance) but  bottom the next. These volatile funds might look great based on one-year returns, but they’re risky and inconsistent. At Windsor Wealth, we focus on funds that follow an investment process proven to work, backed up by  strong, long-term performance after fees.

 Our advice at Windsor Wealth comes at no extra cost, and we aim to make KiwiSaver work harder for you. Here’s how:

• Getting your asset allocation right: Should you go aggressive (higher risk, higher returns) or defensive (lower risk, steadier growth)? We often encourage clients, especially those over 50, to be a bit more aggressive than they think. Why? You’re investing monthly, so market dips mean you buy more units at lower prices, reducing risk over time. A bit of education here goes a long way, especially when paired with consistently strong funds.

• Choosing the right fund: We recommend providers with proven track records, steering clear of average bank funds. If ethical investing matters to you (like avoiding fossil fuels or supporting sustainability), we’ll find funds that align with your values.

• Monitoring your fund: A great fund today might not be great tomorrow if key personnel leave or investment processes change. We speak to top fund managers every six to seven weeks to ensure key people are in place and they’re sticking to the disciplined processes that delivered strong long-term returns. If things change, we’ll recommend a switch to keep your savings on track.

KiwiSaver is a powerful way to grow your wealth, especially when you choose the right fund and strategy over decades. At Windsor Wealth, we’re here to guide you—helping you select a top-performing fund, optimize your asset allocation, and monitor performance so your savings thrive.