Sorted header abstract pattern
Sort my 6 Steps Tools Guides Blog Moreabout Sorted
Search Icon search small

back iconBack

Start here

Sort my...
A man and woman are walking together outdoors and looking happy

back iconBack

Start here

6 steps to get your money Sorted
6 steps to get your money Sorted

back iconBack

All tools


back iconBack

View all

back iconBack

View all

back iconBack

More Sorted Info

View all


Top 5 KiwiSaver myths worth debunking right here and now  

19 April 2024
Reading time: 7 minutes

Posted by Tom Hartmann , 0 Comments

After recording a podcast recently, the hosts were telling me how misinformation can pop up in their audience. “Don’t do KiwiSaver, the government will just take your money,” they hear.  

It’s important that we debunk some myths about KiwiSaver regularly. 

At times for good reasons, many of us have trust issues of one sort or another. Either we’re wary of the government or we’re suspicious of the banks, for instance. Unfortunately with KiwiSaver, there can be a bit of both because it's administered by the government but run by private companies. 

By the end of last year, New Zealanders had over $100 billion dollars invested in KiwiSaver. More than three million of us are members. It’s designed to help us save and invest for the long term, so that we’re in the best possible financial position for life after work someday, while also supporting us to get on the housing ladder along the way.  

Most of us are contributing more than the minimum, too. A recent report from AUT and Te Ara Ahunga Ora Retirement Commission found that the average New Zealander contributes 3.7% of their salary.  

However, because of the wide variations in income, this research also showed that women, Māori and Pacific Peoples are putting away significantly less in dollar terms. The differences are exacerbated by gender pay gaps, time spent out of the workforce, and more time spent in part-time work.  

There are bigger structural forces at play here, but it’s a good reminder that we need to be putting away as much as we can comfortably. If you’re able to contribute more than the 3% minimum, it can be a gamechanger for your future.   

Let’s unpack some of the most common KiwiSaver myths, and why it’s a smart move to be contributing as much as you can.  

Myth 1: There’s no point joining KiwiSaver. 

If retirement is a long way off, it can feel like a waste of money to sacrifice a chunk of your pay each week for an account you might not touch until you’re 65.  

But the earlier you start contributing, the more you’ll see it grow. The difference between 20 and 40 years spent in KiwiSaver could be hundreds of thousands of dollars. You can check what you’re on track to have with the Sorted KiwiSaver calculator

The reality is that NZ Super only provides for a modest lifestyle, and KiwiSaver can help you to live a life of much greater comfort after the age of 65. You’ll need a fund that can last for around 20 to 30 years, and KiwiSaver is one way to get that. 

If becoming a homeowner is in your sights, KiwiSaver can help you to buy a first home. You can withdraw most of your KiwiSaver funds to use towards buying your first home and you may also qualify for a KiwiSaver HomeStart grant

Myth 2: The government could take all my money. 

Nope. Think of your KiwiSaver account like a bank account. Nobody else can touch your individual KiwiSaver account – it’s in your name and it’s your money. 

The government – through Inland Revenue – has set up KiwiSaver and makes sure that the money you put in (and any KiwiSaver employer contributions) goes into your account. 

The government also adds to your KiwiSaver account through its own contribution of up to $521 every year, but that money is yours and cannot be taken back by the government. 

Myth 3: There are better ways to invest.  

If you’re looking to invest 3% or less of your income, it’s going to be hard to find a better investment than KiwiSaver.  

This comes down to the employer and government contributions, which in a way give you a guaranteed return every year, no matter how the market performs.  

If you’re an employee, generally your employer has to match your contributions by at least 3% of your gross wage or salary into your KiwiSaver account. So you contribute 3%, 4%, 6%, 8% or even 10% of your earnings and your employer tops that up by at least another 3%. It’s actually a bit less than that because it’s taxed, but you get the idea: that extra 3% in KiwiSaver employer contributions really adds up over time. 

From age 18 to 64, the government will match 50 cents for every dollar you put into your KiwiSaver account each year, up to $521. If you got it for all those years, on average it would be worth close to $36,000. 

Myth 4: It’s too risky. 

Because your money is in an investment fund, it can go up and down in value. Ups and downs in the markets are par for the course. 

So every time markets fall, it can feel like you’re ‘losing’ money as your account goes down. But that figure is only what your investments are worth in a given moment, and those ups and downs are what can give you better results in the long term.  

It’s also important to know that KiwiSaver funds are not guaranteed by the government. 

That said, particularly because of all the money going into the fund from you, your employer and the government, it would be very difficult to lose all your money in KiwiSaver. It’s designed to keep growing. 

KiwiSaver funds, like all managed funds, are designed to spread your risks. Some kinds of investments, such as shares and property, come with more risk. You can dial your risk up or down by choosing a type of fund that has more or less of the risky stuff.  

But remember that investors get paid for taking some risk with their money – that’s why they generally receive investment returns for doing so.   

It can be helpful to remember that there are also risks associated with not investing your money. Cash can be easily eaten away by inflation, and keeping it under a mattress has its own drawbacks. So if you’re going to be building your savings for a while, it’s best to choose an option that will keep it growing.  

Myth 5: I could lose all my money if my provider goes out of business. 

KiwiSaver schemes are trusts – meaning that the assets are held in trusts for us that are entirely separate from the provider. And there are entirely separate companies called supervisors making sure the fund managers do what they say they’re doing with our money.  

That means if a KiwiSaver provider’s business were to get into difficulty, our money held in trust would be “ring-fenced” – protected from their troubles. Your investments would not be affected, even if the provider’s own business went pear-shaped. 

We wouldn’t be required to pay anything to anyone if that happened, and the supervisor could step in and appoint a new manager for our money. 

And we would still be on track to reach our goals. 


This article was originally published by Stuff.  

Comments (0)


No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments

Kids and money Budgeting Goals Scam alert KiwiSaver Money mindset Managing debt Money tips Investing

Recent Comments

My Money Sorted: Jaelyn
1 Comment

5 steps to get your $521
1 Comment

Who’s teaching your daughter (or niece, or granddaughter) about money?
1 Comment

My Money Sorted: Hilary Barry

How to grow your first million dollars (hint: start early)
1 Comment

My Money Sorted: Ben

sign up bar pattern
sign up bar icon

Want help with your money coming straight to your inbox? Sign up to Sorted.