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 one of nine “default” funds. 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 trustees 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 (22)

Gravatar for Marie


12:23pm | 21 Mar 2021

You're not notified of changes to the value of your KiwiSaver. If you were you would begin to treat them as spam as it changes constantly. It's up to you to monitor. I also wouldn't make a habit of because of the constant change. You should be able to get information about your investment and move it to a lower risk fund if that is what you comfortable with. The return on "conservative" funds is likely to be just that – conservative.

Gravatar for Karen R Rymer

Karen R Rymer

12:33am | 17 Mar 2021

Nice post, it’s actually a great and useful piece of info.

Gravatar for Hans


10:49am | 8 Feb 2021

What happens when I die without having my kiwisaver withdrawn ? It’s virtually impossible to get it out when you move overseas after retirement, there are so many legal hoops to jump through . A legal appointed power of attorney can’t even do it . I think it’s so much harder then it should be .

Gravatar for Mike


10:44pm | 22 Sep 2020

I have increased my contributions to 8% and ever since, my balance has decreased - I have lost thousands. There goes my first home deposit - why do you not have any control of this. I am basically told "too bad" by ASB - so I am paying $130 a week to ASB for nothing.

Gravatar for Ally


1:22pm | 15 May 2020

You're misleading the public by stating our investments are ours. They're not.

There is also no govt guarantee on our deposits, unlike most developed countries which do have guarantees.

We are at risk of losing our hard earned money, or taking a 'haircut'

Gravatar for Steve Schooley

Steve Schooley

12:49pm | 24 Apr 2020

Does KiwiSaver impact on your superannuation if you claim for your wife who is not over 65

Gravatar for Sebastien


10:21pm | 14 Apr 2020

This has been so helpful, I did not have this explained so clearly when i signed up! Thank you.

Gravatar for Naomi


12:05am | 9 Apr 2020

I have been living overseas for more than a year. I understand that I can apply to withdraw all funds except government contributions. What happens to the government contributions? Are they still mine?

Gravatar for Jacqueline


9:02am | 25 Mar 2020

I have a growth fund and it has dropped 24000, in 2 months, will changing to a conservative fund help at this time.

Gravatar for Tom from Sorted

Tom from Sorted

10:23am | 23 Mar 2020

Hi Marie, we've put together some answers to questions like yours; have a look: The key thing is to know you haven't "lost" that money. It's just that your investments in KiwiSaver are "worth" less right now.