We have known for a while that there are some changes coming for KiwiSaver. The reason for the changes is to take better care of the over 400,000 people that are still in default KiwiSaver Schemes. The major change is that all members in default schemes will be moved to balanced funds rather than conservative funds. This is to increase the likelihood of higher returns in the long term, to give these default members a chance to have a better nest egg when they retire.
On the 14th May, Finance Minister Grant Robertson and Consumer Affairs Minister Dr David Clark announced the default KiwiSaver providers commencing 1st December 2021.
Gone from the list are AMP, ASB, ANZ, Fisher Funds, and Mercer. The newly appointed default providers are Simplicity and Smartshares (NZX), alongside BNZ, Booster, BT Funds (Westpac) and KiwiWealth. These six providers were selected because they offer the best value to members, in terms of higher levels of service and lower fees.
“To illustrate just how much default members stand to gain, an 18-year-old earning $50,000 a year and contributing three percent of their income to KiwiSaver is estimated to have an extra $143,000 when they reach 65. They will also pay around $3,900 less in fees.” Dr David Clark said.
How does this affect you?
If you are a default KiwiSaver member and are with one of the providers that is no longer on the list, you will automatically be transferred to a new provider. IRD will send you an info pack, you don’t need to do anything.
That said, it’s a good time to think about whether you are in the right KiwiSaver fund for your needs. That’s something we can help you with. We will explain your options to you and help you to decide what fund best suits your risk profile and your current and future needs – it’ll be different whether you are looking to buy your first home, or to retire in the next few years. There is quite a lot to consider, from which fund to which rate you want to contribute at.
Have a look at the KiwiSaver page on our website for helpful explanations of the KiwiSaver basics, and when you are ready to chat send us an email or book an appointment at the Calendly link at the bottom of this page.