How KiwiSaver works and why it's worth joining

How does KiwiSaver work?

A KiwiSaver fund is more than just a savings account. It's similar to what we call a managed fund. Your fund manager invests your KiwiSaver savings on your behalf, which means your savings also earn returns over time.

Your KiwiSaver grows with:

• Your automatic contributions
• Employer contributions of close to 3% on top of your pay
• Government contributions (up to $260 every year!)
• Investment returns from all the contributions being invested for you by your KiwiSaver provider
• Any additional money you choose to put in. You can make voluntary contributions – lump sums or regular automatic payments – at any time, either directly to your KiwiSaver provider or through Inland Revenue.

If you’re 18 or over and start a new job you’ll be automatically enrolled in KiwiSaver (with some exceptions). And that’s typically a good thing!

You can use KiwiSaver to save for a first home

Visit the Kāinga Ora website for more information on using KiwiSaver for a first home.

You can use KiwiSaver to save for retirement

KiwiSaver funds come in five basic types

We’ve grouped the hundreds of KiwiSaver funds into five types to make things easier. Once you find which is right for you, it’s much simpler to find a fund of that type.

Each fund holds a mix of investments, and which type they fit into is based on how much of the more risky stuff, like shares and commercial property, is in the mix. The more risk you take on, the more potential you have for better results, but your balance will have more ups and downs along the way. 

Depending on how long you are investing for, and your attitude towards the ups and downs that can happen with investing, one type of fund will work particularly well for your situation.

When it’s time to withdraw your money

How fast you open the tap is up to you: keep it off for now and leave your money invested in KiwiSaver or open it slightly to drip-feed some income. Our retirement navigator can help you chart your spending.

There’s no rush – you can leave your money where it is while you work through all the issues and decide. For example, if you want to make regular withdrawals, there may be a minimum amount required or some fees.

It may be worth talking with a financial adviser about your financial needs and risks, and work out the best course of action to reach your goals. Find out how to find a financial adviser in our guide.

Contact your KiwiSaver provider directly to find out what’s involved and to make arrangements. 

What if I’m still working?

You can still keep your KiwiSaver account open and growing. Your employer can choose to keep contributing, although they don’t have to. The government will no longer pay its contribution though, since you're typically eligible for NZ Super.

Why you want to take advantage of KiwiSaver

• KiwiSaver contributions come out of your pay before you see it. This makes saving easy.
• If employed, your employer has to contribute at least 3% of your gross wage or salary into your KiwiSaver account. That’s on top of your own contributions.
• The government pays into your KiwiSaver account as well – an annual government contribution (if you are a contributing member aged 18 or over) of up to $260.
• As well as saving for retirement, you can also use KiwiSaver for buying your first home through a KiwiSaver first-home withdrawal.
• If you change jobs or leave the workforce your KiwiSaver account moves with you.
• If you experience hardship it is possible to access the funds in your account early.
• It is generally a lower-cost option to invest in managed funds.