KiwiSaver

Redirecting government KiwiSaver contributions to children and young people could be a way to set them up for life, at little additional cost, KiwiSaver providers say.

KiwiSaver is shaping up to be an election issue this year. Both National and NZ First have so far revealed plans to increase what people must contribute, amid concerns about the future financial sustainability of the NZ Super scheme.

Commentators including investor and director Fraser Whineray, former chief executive of Mercury NZ, have said a reallocation of the government contribution could help.

It has been cut to $260 a year for people who contribute at least $1042, provided they earn less than $180,000.

Whineray said every child could have an account opened by Inland Revenue and $5000 invested into a growth fund by the Government on their behalf. With a family contribution of $100 a year tha could give a child a balance of about $20,000 at 18 and 15 times that by 65.

“Today the taxpayer spends roughly $500m a year on unevenly distributed incentives for people aged 18–64 …Under KiwiSaver 2.0 that money is repurposed: the largest share is redirected to the earliest life stage, and the remainder is used to close parental-leave gaps in working careers.”

Pie Funds chief executive Ana-Marie Lockyer said she supported the idea.

“Directing government contributions to young people at birth, with the benefit of long-term compounding, is a powerful way to build both financial foundations and confidence in investing,” she said.

“We’ve seen this concept in practice before. The UK’s Child Trust Fund – often referred to as a baby bond – was designed to ensure every child had a financial asset at 18, encourage long-term savings habits, and help address wealth inequality. The principle was simple but powerful: start early and let time do the heavy lifting.

“My 22-year-old, who was born in the UK, is heading back there and I recently reminded her to check on her baby bond. Meanwhile, my younger child, born in New Zealand, quite reasonably asked, ‘How come I didn’t get any money when I was born?’ It’s a fair question.”

She said giving children a starting investment created tangible financial benefits over time and normalised investing from the start.

“That early connection to the system can build confidence, engagement and a stronger long-term savings culture, in addition to allowing the effects of compounding work its magic.”

Koura founder Rupert Carlyon said it was a good idea, but there would need to be clear decisions made about why it was being done.

“If we are putting the money into KiwiSaver, then the purpose will simply be to help people buy their first home. I'm not sure there is much difference between this and giving them a first home grant which is easier to do and can be much more targeted – not everyone needs the help or assistance.  I'm also not convinced home ownership is the financial panacea that everyone thinks it is either…   

“If we were to use it as a way of educating kids and getting them to understand money – that is a very worthy objective – but will need a lot more than simply giving kids a $1000 kick start payment.  It is hard enough to get adults to engage with their KiwiSaver and understand it, let alone kids.  It's a nice idea, but the reality will be extremely different I fear.’

He said it could be better to spend the money in even more targeted ways.

Kernel is celebrating taking the top spot for the high-growth and cash categories in its first three full years.

Morningstar has released its KiwiSaver survey for the December quarter.

It shows that over the quarter, default funds returned an average 2 percent, conservative 0.7 percent, balanced 1.6 percent, growth 1.7 percent and aggressive 2.8 percent.

Over a year, aggressive funds were up 12.8 percent and growth 9.7 percent. Balanced funds were up 9.7 percent and conservative 5.8 percent.

The highest performer over a year was Kernel’s S&P Global Clean Energy fund and the lowest performer was Koura Bitcoin, which has been dragged down by recent falls in the price of the cryptocurrency.

It is the first time that Kernel features among the three-year returns. For conservative, balanced and growth funds, Quay St is the best performer over three years. But Kernel is top for aggressive and cash funds.

“That timing matters,” Kernel founder Dean Anderson said. “Those three years include inflation shocks, rapid rate rises, geopolitical conflict and sustained market volatility. It’s a period that has tested investment approaches, not flattered them.

“The data also highlights just how wide the variation in KiwiSaver outcomes can be over the same market conditions. Different fee levels, levels of transparency and investment discipline are leading to meaningfully different results for KiwiSaver members.

“What’s coming through clearly is that when markets are chaotic, the controllables start to dominate. Fees, diversification, transparency and a data-driven approach have mattered far more than predictions or complexity. The last few years haven’t rewarded clever market calls – they’ve rewarded process.”

Some big names, such as ANZ, continue to lag. It is ranked 31st over three years in the balanced category and 27th in growth.

Report author Greg Bunkall noted another low-fee provider, Simplicity, also had a strong quarter with its funds in the top of most categories.

ANZ still has the biggest slice of the market at $23 billion. ASB is second.

There is now $145 billion in assets under management in KiwiSaver, up $5b in three months thanks to market returns and inflows.

KiwiSaver withdrawal numbers are up, but it’s not an easy process to go through, one adviser says.

Inland Revenue data shows that across 2025, there were 58,460 KiwiSaver withdrawals for hardship reasons.

About 48,000 withdrawals were made by people buying a first home.

In total, $514.8 million was withdrawn from KiwiSaver because of hardship, and $2.1 billion for a first home.

Dean Anderson, founder of Kernel, said the increase in withdrawals year-on-year created an extra level of workload that was a pain point for many providers.

He said it would be better if there was a centralised system to deal with the applications.

Ed Glennie, of Genesis Advice, said he had dealt with 11 hardship applications from his 370 clients.

He said, at an ANZ KiwiSaver adviser day, its head of investments, Fiona Mackenzie, had taken an opposing view to Anderson’s.

“She had a very interesting point – and this could be more the banking perspective – they want to be there through thick and thin.

“That it’s important for them to get the overall picture for the client… she said we don’t want to outsource it because that’s not really fair to the customers, right? It’s all very well that you’re with us in the good times and then suddenly in the bad times we outsource you to someone else. I thought that was quite interesting.”

He said he would help clients through the process as an adviser. But he said it should be a worst-case scenario option.

“We were looking at one this morning … it was a person who just has debts outstanding. And one last year where it was a car that they needed to get to and from work.

“They are the sort of situations that you can understand why they're doing it, but it's not for me to judge. I'll help them go through that process if they ask me, but really they need to get that material.”

He said it could be a complex process that took time to work through. “They are not just ‘hey send a form in and we’ll give you the money. It really is quite a process.”

It could be so onerous that people would only do it if they had to, he said.

KiwiSaver providers are hoping this is the year that politicians can work together on a better future for the retirement savings scheme.
It is shaping up to be an election issue.

National has promised to increase contribution rates to 6% for both employees and employers if it is returned to government. In his State of the Nation speech in Auckland yesterday he named KiwiSaver as one of National's key election planks going into this year's election.

NZ First has proposed a 10% contribution rate and to make the scheme compulsory, offset with tax cuts.

Pie Funds chief executive Ana-Marie Lockyer said she wanted to see genuine cross-party collaboration this year and a shared commitment to long-term success for KiwiSaver.

“That includes agreement to support a build on of the staged increases already signalled in party policies, giving New Zealanders confidence that the system will remain stable, predictable and focused on improving retirement outcomes rather than short-term politics.”

At ANZ, managing director of funds management Fiona Mackenzie had a similar hope.

“New Zealanders benefit most when KiwiSaver settings are stable and focused on the long term,” she said.

“A cross party commitment to a gradual, well signalled increase in contributions would give people confidence that the system is evolving in their best interests, without being exposed to political cycles. Once that pathway is agreed, the real strength comes from staying the course and allowing compounding investment returns to work for all New Zealanders.

“And this isn’t just about what government can do. It’s also about what each of us – providers, employers, and KiwiSaver members – can do to help more New Zealanders build the kind of life they want after 65. For example, at ANZ we continue making KiwiSaver contributions for employees while they’re on parental leave so that ‘carer gaps’ don’t become ‘retirement gaps’. Actions like this, alongside good long term policy settings, can make a meaningful difference – particularly for women – and help ensure more New Zealanders are set up to thrive in retirement.”

Dean Anderson, founder of Kernel, said politicians needed to stop listening to the “legacy end of town”.  “Politicians need to stop stuffing it up and start engaging with innovators like Kernel who are actually driving the industry forward.”

He said more should be done to help the roughly one million New Zealanders who were enrolled in the scheme but not regularly contributing. “KiwiSaver is a major life investment for most of us; it’s time we gave it the focus and consideration it deserves.”

Koura founder Rupert Carlyon said he would like to see real incentives for people who saved in KiwiSaver. That could be paid for by means-testing NZ Super, he said.
“Basically moving very quickly to an Australian system.  The beauty about means testing is it does not need a long transition period, it can be done on day one which then means that we can realise cost savings immediately.”