How does KiwiSaver work? Many questions tend to crop up around KiwiSaver, so we've put together a list of hits and myths in this KiwiSaver FAQ.

Is KiwiSaver worthwhile?

You might be wondering: what's the point of joining KiwiSaver? These are the main benefits of KiwiSaver:

  1. It’s relatively easy. Since NZ Super only provides for a modest and frugal lifestyle, KiwiSaver lets you put away extra money on top of it to fund 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.
  2. Your employer puts in money (employer contributions). If you’re employed, 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% or 8% of your earnings and your employer tops that up by another 3%. That extra 3% in KiwiSaver employer contributions really adds up over time.
  3. The government puts in money (the member tax credit). If you’re between the ages of 18 and 64, the government will match 50 cents for every dollar you put into your KiwiSaver account each year, up to $521. The KiwiSaver government contribution is called a “member tax credit”, and if you got it for all those years, on average it would be worth close to $36,000.
  4. You can use KiwiSaver to buy a first home. As well as saving for retirement, you can withdraw most of your KiwiSaver funds to use towards buying your first home. You may also qualify for a KiwiSaver HomeStart grant.

Does the government hold 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 when it matches the money you put in through the member tax credit, up to $521 each year. But that money is yours and cannot be taken back by the government.

So where does my money go?

It goes into your KiwiSaver account, which is part of a larger fund managed by a private KiwiSaver provider. Your provider then invests your money into different assets like cash, shares, fixed interest and property, depending on the type of fund you have chosen.

Everyone needs to choose which fund to be in. If you didn’t choose when you started in KiwiSaver, the government did this for you by putting you into a “default” fund. This was to get you started, until you got around to making a choice yourself.

To learn more about the fund you are in today, or what other options are available, have a look at our KiwiSaver fund finder. It’s designed to offer you an easy way to compare what you have today with other options on the market.

The exact mix of investments that your money goes into will depend on what type of fund you’re in – defensive, conservative, balanced, growth or aggressive. So it’s important to choose the right type of fund for your situation, and the fund finder can help you find a type that suits.

What if a KiwiSaver provider goes out of business?

KiwiSaver schemes are trusts – so your money is tucked away in a trust and stays yours. That means if a KiwiSaver provider’s business were to fall over, your investments wouldn’t be affected.

All KiwiSaver providers are regulated by the Financial Markets Authority and have independent supervisors that monitor the actions of fund managers.

How do I get the KiwiSaver government contributions?

Basically, you need to put money into your KiwiSaver account – that’s it. For every dollar you put in (as long as you’re between 18 and 64) the government will match it with 50 cents, up to a maximum of $521.

So to get that full KiwiSaver member tax credit each year, you’d need to put in at least $1,043. That works out to roughly $20 a week. Anyone earning $35,000 or more and putting in 3% is already doing this, and will get the full KiwiSaver government contribution amount automatically.

However, if you earn less than that as an employee, or if you're self-employed and aren't regularly contributing, you will need to top up your KiwiSaver account to get the full $521.

But even putting in less than $1,043 is worth it – the government will still match that 50 cents on the dollar. So for example, if you put in $500, you’ll get an extra $250.

How come I don’t see my KiwiSaver money right away?

When you first join KiwiSaver there is a bit of a delay, as Inland Revenue must hold your contributions for three months from the date of your first contribution before transferring them to your KiwiSaver provider.

Although your KiwiSaver contributions are deducted each payday, it can take up to three months for them to reach your KiwiSaver account. Your employer first sends them to Inland Revenue, which checks that everything is correct. Inland Revenue then transfers the funds to your provider, including any interest earned during that time.

Could I lose it all?

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

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.

Theoretically, you could lose it all – no investment is totally risk-free – but it would take a massive disaster for all markets to crash at the same time and permanently lose all their value. And at that point even bank accounts might not be any better off!

How risky is this?

KiwiSaver funds, like all managed funds, are designed to spread your risks. They don’t typically concentrate all your money in one investment, but split it among many investments, both in New Zealand and overseas.

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 these.

Some investments will do well, others less well, but in the long run the aim is that they will grow your money over time.

Will KiwiSaver change in the future?

KiwiSaver has gone through some changes since its introduction and it’s impossible to predict what might happen in the future. Those who joined KiwiSaver before 2015, for example, got a $1,000 kick-start from the government to join, which has since been removed. That said, KiwiSaver is part of the New Zealand landscape now and it would be very hard to make significant changes to it.

Do I get NZ Super as well if I'm in KiwiSaver?

Yep. Your KiwiSaver money is for you on top of what you’ll get from NZ Super (not instead of). Being a KiwiSaver member does not affect your eligibility for superannuation or reduce the amount you currently receive.

Comments (32)

Gravatar for Jess


10:35am | 16 Jun 2021

What would happen if nobody invested in kiwisaver?

Gravatar for robert


9:16am | 29 May 2021

almost 65 and received letter from my provider with options for kiwisaver funds saved. However I prefer to keep investing in the fund even though the govt. tax credit stops. if employers contribution continues seems its still a quality scheme. What do you think?

Gravatar for Tom from Sorted

Tom from Sorted

6:40pm | 28 May 2021

Hi Brad, thanks for your question. Wouldn't skipping one of your employer's contributions be giving yourself a pay cut effectively?

Gravatar for Brad


7:51am | 28 May 2021

Hi Sorted, I'm trying to figure out if I can limit my contribution. I'm earning over $80k per year (total) from two jobs. I only want to pay the bare minimum to get the maximum government contribution. So $1043 a year.

Would it be possible to take an employer contribution from one job only?

Gravatar for Tom from Sorted

Tom from Sorted

11:37am | 13 May 2021

Hi Mark, thanks for commenting. Here are some answers:
1. Both. Contributions into KiwiSaver are in post-tax dollars, and investment returns are taxed. However, when you withdraw, your money is not taxed.
2. You can easily sort through KiwiSaver funds by type and sort by lowest fees first on our Smart Investor platform here:
If you'd like an estimate of how much you'll pay in fees over your years in KiwiSaver, our fees calculator will show you:
3. Simplicity's scheme is your option here. Again, Smart Investor has everything about their funds:

Gravatar for Mark


11:50am | 4 May 2021

I am trying to find information on the taxation of KiwiSaver contributions and benefits for my son, who is a new arrival in NZ from Aust.:
1. Are the contributions from wages taxed before contribution or by the KiwiSaver fund?
2. Where can we find fund fee comparisons?
3. Are their not-for-profit fund options available?


Gravatar for Tom from Sorted

Tom from Sorted

9:52pm | 3 May 2021

Thanks Megan, only when you are eligible to withdraw (ie, over 65).

Gravatar for Megan


7:18pm | 1 May 2021

Can I transfer part of my KiwiSaver to my child to be used as a deposit on their first home?

Gravatar for Tom from Sorted

Tom from Sorted

3:15pm | 19 Apr 2021

Thanks Carol, your fund continues to hold the investments in it, and those units you own will continue to have the potential to keep growing over time. What's affected when you turn 65 are typically the contributions: employers are no longer required to match your savings, the government incentive stops (as you become eligible to receive NZ Super), and many people stop contributing as they wind down their working lives. But your savings stays invested and can keep growing.

Gravatar for Carol


9:55am | 18 Apr 2021

Can you continue contributing to KiwiSaver after you turn 65 and still working, and does the fund remain the same or are there changes due to the fact you are 65? Ie does my savings continue to grow?