KiwiSaver

KiwiSaver providers are cautiously supportive of changes to make it easier for farmers to buy homes – but would prefer the tinkering with the system stopped.

The Government announced at the weekend that the laws would change so that people who have jobs where accommodation is provided can still use their accounts to buy a house.

The rules have previous required that people withdrawing money for a first home do so with the intention of living in it.

"Workers in service tenancies, such as farm workers, rural teachers, country cops, and defence personnel, have effectively been locked out of first home withdrawal because their jobs require them to live in employer-provided housing," Finance Minister Nicola Willis said.

“That’s not fair, so we're making a technical change to the KiwiSaver Act to ensure workers in service tenancies aren't denied the opportunity to put a foot on the property ladder.

"The change will allow service tenancy workers to use their KiwiSaver for a first home purchase without having to live in it."

People will also be able to use their KiwiSaver balances to purchase a farm through a commercial entity they majority own, when they plan to live on it.

Pie Funds chief executive Ana-Marie Lockyer said the service tenancy change was logical.

“Allowing balances to be used in connection with purchasing commercial farming operations raises more complex issues. The devil will be in the detail, and as a provider, we’ll need to understand the operational impact once that detail is clear.

“Stepping back, I’d prefer to see less tinkering with KiwiSaver settings and more focus on a bipartisan long-term strategy. KiwiSaver is now central to New Zealand’s retirement system — it deserves stability and a clear roadmap for the next 20 to 30 years.”

Financial Services Council chief executive Kirk Hope also told media he had similar concerns. He said any time the scope for withdrawals was widened, it could undermine the scheme as a retirement savings vehicle.

Koura founder Rupert Carlyon said he was not convinced the changes would make much difference.

“The changes look sensible, but the devil will be in the detail. Personally, I very much doubt there will be very many farmers that end up using KiwiSaver to buy their farms that are not already doing so – you are already allowed to use them if buying in your personal name. 

“I also support the idea that people provided with housing for their work will be able to buy a house using their KiwiSaver.

“My only concern would be, is this a great use of Parliament’s time? I suspect we are talking about hundreds of additional withdrawals a year here – a lot of effort for a pretty small change.”

Debt solution charity Debtfix is working with a growing number of KiwiSaver providers, to help them handle their financial hardship withdrawal workload.

Financial hardship withdrawal numbers have increased sharply in recent years. There were 10,000 more withdrawals last year than in 2024, to a total of 58,460.

Each withdrawal requires KiwiSaver provider staff to process the application for a supervisor to make the decision.

Debtfix chief executive Christine Liggins said her organisation was working with six providers so far, including Milford Asset Management and Simplicity.

“Milford have said it’s actually improved their staff morale – obviously we’re dealing with all the people in hardship and we get all the abuse and all the struggling people, that’s what we are set up to deal with. It takes them out of the KiwiSaver provider’s hands and they can get on with making and saving money rather than giving it away.”

She said Debtfix planned to start working with more KiwiSaver providers this year. “We’re just in the process of updating our software to help people engage, complete the forms, provide the documents and cut down the processing time for everyone.”

She charges KiwiSaver providers for the service but said members ended up with a better experience.

“We're providing a better service because we're talking to the members about all of their options for getting out of hardship and giving them all of the recommendations, whereas a KiwiSaver provider really just says ‘you're in hardship, process the form, off you go’.”

Her team would spend about eight hours with a client, she said.  “We get to know the client and try and understand the circumstances.”

That might involve directing them to the Ministry of Social Development to see if they could claim more entitlements, she said, or talking to their creditors about hardship provisions.

“We’ve got all the normal sort of financial mentoring tools in our kete. We can share that with them … sometimes if someone's just struggling with debt, then it might just be a debt solution that they need.”

She said it was important to make sure the KiwiSaver withdrawal was not just a bandaid solution.

“We actually want to make sure that we're looking at all options and opportunities for the client. And then we can get them out of hardship, but it's a longer term solution than a bandaid.”

A number of KiwiSaver providers have reported having to take on additional staff to deal with hardship claims.

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.