KiwiSaver is vital to preparing for retirement, so choosing the right KiwiSaver provider matters! It’s easy enough to change your KiwiSaver provider, but each time you change, your funds are at risk of missing an upward swing in the market, and during the transfer they’re not earning any returns.
Once you have chosen your provider, you can switch your investment between the different funds (risk profiles) available with that provider, so your funds are out of the market for a shorter time. You need to do this as you move through various life stages as you buy your first home or get closer to retirement.
At a glance, it may seem that all providers are much the same, but there are key differences. We’ve pulled together the top 3 things to consider when picking a KiwiSaver provider.
1. KiwiSaver provider investment returns
KiwiSaver funds aim to provide returns over the long term. Review the historical performance of the funds you’re considering, keeping in mind that past performance does not indicate future results. Choose funds that have demonstrated consistent performance within their specified risk profiles. No provider will have a magic wand for picking investments only going up, so their returns will suffer if the market has suffered. Keep the market in mind when looking at a provider’s performance.
Some providers perform well in some fund categories and not so well in others. Higher returns are great, but don’t get caught out by providers with one good year. You are looking for consistent performers near the top.
2. KiwiSaver provider fees
KiwiSaver providers must disclose any fees. Get clear on the fee structure, including annual fund charges, management fees and any additional charges like administration fees. Compare the different providers’ fees alongside their past performance. Note that some higher-risk profile funds may have performance-based fees, which will differ between fund profiles. Make sure you are comparing apples with apples.
One of the providers we work with gives 0.2% of the fees you pay to charity. You get to select who gets the donation from their approved list of charities. How cool is that?! You’re saving for retirement and supporting a charity at the same time!
We expect continued pressure on providers to constantly review the fees, especially as the fund values continue to grow.
3. Ethical and responsible investing options
Some providers offer ethical and responsible funds that don’t invest in controversial industries such as weapons, tobacco, gambling and nuclear power.
When choosing your provider, consider the above and select the one that best suits your values and concerns. Take care, as even funds that are marked socially and ethically responsible can have investments that are not ideal. If it’s important to you then look into why they are still in the fund.
There is no need to feel intimidated by the options or to spend a lot of energy in making a choice. As a financial adviser, Elise will provide you with tailored advice, both now and throughout your time invested in KiwiSaver. Email her at email@example.com for a free consultation and support.