How KiwiSaver works and why it's worth joining

No, not necessarily. In fact, from 1 December, there will be more advantages to staying in one than there were before: they'll exclude investments in fossil fuels and illegal weapons, cost significantly less than other funds, have a balanced investment mix (instead of conservative), and offer a high level of service to their members. But since balanced funds are not right for everyone, default funds won't be either. To make your choice of whether to be in a default fund, first find out which type of KiwiSaver fund will work best for you.  

KiwiSaver is not guaranteed by the government. It is, however, administered by Inland Revenue, which helps make sure it works properly, and overseen by the Financial Markets Authority, which makes sure KiwiSaver companies behave themselves and do right by you. It's important to remember that KiwiSaver providers are private companies, like any bank we use. Here are more KiwiSaver facts. 

No, it’s easy as – about the same as switching your mobile or power provider, actually. You let your new company know you want to move to them, and they do all the work behind the scenes. There are two ways of switching with KiwiSaver: staying with your provider but moving to one of their other funds, or moving to a new provider. There are good reasons to switch, such as when you're getting closer to the time you plan to start spending your KiwiSaver money, on a first home or in retirement. But there are also bad reasons to switch, such as because you heard about some other fund doing better than yours. Here's why. 

No. When you take out your KiwiSaver money, either for a first home, financial hardship, or to use to live on in retirement, that money is tax-free. Your KiwiSaver contributions are made after your income has been taxed, and the gains from your investments that you own in KiwiSaver are taxed as well. But when you withdraw for a first home or retirement at age 65, there is no tax to pay. It's your money to use. To withdraw your KiwiSaver money, contact your provider directly. 

There are three prescribed investor rates (PIR) in KiwiSaver: 10.5%, 17.5%, or 28%. It helps to make sure your rate is correct so you're not paying more tax than you should be. If your income is sometimes or always less than $48,000 each year, you may be paying too much tax in KiwiSaver. It's simple to correct this: just contact your KiwiSaver provider directly and let them know.

Your KiwiSaver money is much like everything else you own – when you die it becomes part of your estate and is distributed according to the instructions you leave in your will. It's important to have a will drawn up just in case. Without a will the government will use a set formula to split up your assets – and this might not be what you would have wanted. To make sure your wishes are followed, particularly with your KiwiSaver, here's more about wills. 

• Inland Revenue KiwiSaver website: Everything there is to know about the KiwiSaver scheme
• Housing New Zealand website: Using KiwiSaver to help buy a first home
• Investment advice: Talk to a KiwiSaver provider or an authorised financial adviser about the investment options on offer.
• Financial Markets Authority website: KiwiSaver regulations and international transfer information

If automatically enrolled, you can ‘opt out’ (leave KiwiSaver), but only between 2 and 8 weeks of starting a job. Once you join you have to contribute for at least 12 months. (If you’re 18 or younger and have been incorrectly enrolled, you can still opt out through Inland Revenue.)

You can choose to ‘opt in’ (join KiwiSaver) at any time – although once you do, you can't opt out –either through your employer or through a KiwiSaver provider.