KiwiSaver has reached a significant milestone, with the Financial Markets Authority (FMA) reporting that the scheme now manages over $111.8 billion in funds as of March 2024. This achievement marks a 19.3% increase from the previous year and reinforces KiwiSaver’s vital role in New Zealand’s retirement savings landscape. With 3.33 million active members, up 2.5% year-on-year, KiwiSaver continues to expand, offering New Zealanders a reliable way to save for their futures.
According to the report, KiwiSaver’s impressive growth is driven by strong contributions from employees, employers, and the government. Over the past year, $11.2 billion was contributed to KiwiSaver, with individual salary and wage contributions peaking at an all-time high of $5.9 billion. Meanwhile, $5 billion was withdrawn, including $1.2 billion for first-home purchases, demonstrating KiwiSaver’s flexibility as both a retirement savings vehicle and a tool for helping Kiwis enter the housing market.
With Kiwi’s continuing to recognise the value of the scheme, the average KiwiSaver balance continues to rise and the mean balance now sits at $33,514, up 16.5% from the previous year. Investment returns also had a banner year, with KiwiSaver posting $13.1 billion in net investment returns, a significant recovery from the previous year’s loss and a reminder why it is important to look at KiwiSaver returns over the longer term rather than a single 12-month period.
KiwiSaver offers numerous advantages as a retirement savings vehicle. Its success is due to a combination of personal contributions, employer contributions, and government incentives. Most employees benefit from a minimum employer contribution of 3%, with the government also adding an annual member tax credit of up to $521 for those who contribute at least $1,042 annually.
In addition, KiwiSaver’s flexibility allows members to choose from a variety of funds, ranging from conservative to growth. Growth funds, now representing 46% of total funds under management, have proven particularly attractive, holding $51.4 billion. This flexibility, combined with compound returns, makes KiwiSaver one of the most effective long-term investment strategies for New Zealanders.
Moreover, KiwiSaver isn’t just about retirement; for many members, it provides a pathway to homeownership. According to the report, in the past year, over 35,700 people made withdrawals to help fund their first homes. This dual-purpose feature – offering both long-term financial security and near-term assistance with major life events – sets KiwiSaver apart from many other investment schemes.
With Annual Member Statements having come out over the last few months, now is an opportune moment to ensure your fund is aligned with your financial goals. While growth funds have performed particularly well over the last 12-months (and longer term in many instances), conservative funds may suit members nearing retirement or who are looking to purchase their first home over the next one-to-two years.
As there is no ‘one-size-fits-all’ approach to investment management, taking an active approach and speaking to an adviser to review your fund choice every couple of years will help you maximise returns over the long term.
The FMA’s report also highlights the importance of reviewing fees and fund performance. High fees can erode savings, so it’s crucial to ensure you’re getting good value for money and comparing net returns after fees and not just fees.
With total funds under management now exceeding $111.8 billion, KiwiSaver is firmly established as New Zealand’s leading retirement savings scheme. However, it’s not enough to simply be part of KiwiSaver. Regular reviews of your fund selection, contributions, and fees can make a significant difference in your long-term financial outcomes.
If you’re uncertain whether your current fund is the right fit for you, or if you’d like to explore other options, the team at Threefold is here to help. Book a free consultation with a Threefold KiwiSaver adviser today by clicking here. Let us help you maximise your KiwiSaver and secure your financial future.
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.
