Established in July 2007, KiwiSaver is New Zealanders’ primary portal to the investment universe. According to IRD data, there are currently 3,351,507 active members in the scheme, with over $271 billion* currently invested.

These big picture stats provide a broad overview of the size and scope of the fund, but don’t offer personal insights. Survey data can fill the knowledge gap here, providing information that can be extrapolated into wider trends.

Our inaugural KiwiSaver survey helps paint a picture of how we are engaging with the scheme. It’s a snapshot of a time and place and reveals insights that point to wider social and economic conditions.

We feature the results of our KiwiSaver survey in this special edition of Informed Investor. There are interesting take-outs here around investment behaviour by age, the range of assets we invest in, and our priorities when choosing funds.

Our KiwiSaver special also includes useful Q&As from experts in the field. If you’ve ever wondered whether to enrol your kids in KiwiSaver, if it’s a good idea to invest when you’re self-employed, or if it makes more sense to have your money in term deposits right now, you’ll find the answers here.

We hope you enjoy reading about KiwiSaver and use the insights to inform your own investment behaviour.

Strong engagement

Te Ara Ahunga Ora Retirement Commission recently released figures around the average KiwiSaver balance. Sitting at $31, 605, it’s up over $4,000 on the 2023 figures, reflecting the recovery of the financial markets last year.

Our respondents reveal even stronger engagement with the scheme. Over 62 per cent have balances of $50,000 and over, with 33 per cent having between $100,000 and over in their accounts.

It’s interesting to note that nearly half of the respondents aged between 25 and 34 had $100,000-$200,000 in their accounts. In the 35-50 age range, 44 per cent of respondents had between $100,000 and $200,000 in their fund.

Those aged 51-65 were more split when it comes to savings – 13 per cent listed their balance at between $20,000 and $50,000; 66 per cent had between $50,000 and $100,000. Outliers existed at both ends of the spectrum: 11 per cent of respondents had between $5,000 and $10,000, with 8.9 per cent having over $200,000.

“Kiwis are generally more aware of KiwiSaver, if for no other reason than it has been a feature on their payslips for over 17 years now,” says Mike Heath, general manager of InvestNow.

He adds the recent challenging housing market may have driven younger people to invest more in their KiwiSaver because they expect to need more for a first home loan.

“Or is it that they have ‘written off’ the prospect of their home being their retirement savings and have decided that KiwiSaver will play that role?”

“For older people, I’d imagine their priority has been to pay off their mortgages and then focus on their KiwiSaver with any discretionary cash that can be invested.”

Provider choices

KiwiSaver members are confident in choosing their own providers. Nearly 87 per cent choose their own provider, with just 13 per cent using a default provider.

Reputation of the provider and results/performance were listed as the key priorities (52.7 per cent and 51.5 per cent respectively), with low fees (35.9 per cent) and ethical/sustainable reasons (21.6 per cent) also popular choices.

This is reflected in respondents’ level of confidence in their knowledge of KiwiSaver: over 90 per cent claimed they were quite, average, or very confident.

There is no doubt more people are familiar with/aware of KiwiSaver, but that doesn’t always translate into understanding or knowledge about it, says Heath.

“If you look at some of the stats around contribution levels, how often people review their KiwiSaver portfolio, the very high percentage who have selected their own provider, they do all point to people having a high level of understanding, confidence and engagement.”

We are loyal

We are living through tricky economic times. The cost of living is high, as are interest rates. Household finances are a struggle for many.

Interestingly, this isn’t changing our KiwiSaver behaviour. Nearly 75 per cent of respondents stated they had never taken a savings break, with 90 per cent claiming they don’t intend to take a break in the next 12 months.

This is a credit to Informed Investor readers, says Heath.

“They are engaged investors, and they understand the role of KiwiSaver and the material negative impact of taking any contribution holidays. And being savvy and engaged they are aware of other opportunities to manage any financial challenges, through better management of their other discretionary outgoings.”

Wealth creation

KiwiSaver is a useful tool in our investment arsenal, but for many it’s only one component of wealth creation.

Our respondents invest in a range of assets, with stocks (63 per cent), managed funds (52.8 per cent) and property (47 per cent) the top three choices.

It’s interesting to dig a bit deeper here. The stats reveal that, in the 25-35 age range, 53 per cent of respondents invest in shares. Once we get to the 51-65 range, 64 per cent invest in shares.

This increase in assets over age is also reflected in property. In the 35-50 age range, 31 per cent invested in property, whereas 53 per cent of the 51-65 age range invest in property.

But there’s an interesting anomaly here. Although only a small percentage of respondents were aged between 25-34 (12 per cent), 53 per cent of these invested in property.

Any number of factors can influence survey data. And one can make an assumption, given the nature of the survey, that the 25 to 34-year-olds who took time to engage in a survey around investment are highly engaged with the subject, and their investment behaviour would reflect this.

Mike Heath, from InvestNow, has interesting insights into the results of the KiwiSaver survey.

Engaged audience

It comes through clearly that the readers of Informed Investor are engaged and savvy when it comes to their KiwiSaver portfolios. This is evidenced by the following:

• 87 per cent selected their current KiwiSaver provider and aren’t simply relying on whatever results a default provider would deliver
• 50 per cent check their portfolio annually. Having a plan and regularly reviewing your portfolio, against that plan, is a core investment principle and so it’s great to see your readers understand that as well
• 53 per cent selected their provider based on reputation. Savvy investors understand that past performance is not a guarantee of future returns, and that it’s more important to consider the capabilities/strategies/expertise/philosophies of the provider to ensure they align with them and what they are looking to achieve.

Convenience isn’t the answer

It’s worrying to see people say their KiwiSaver portfolio is with their bank because it’s “easier”, “more convenient”, “I can see it alongside my other bank accounts”. Ease and convenience are not key investment principles and people should pay more attention to how their money is being managed. Passively engaging with your KiwiSaver is not a good approach.

Doing more

It’s great to see that almost 50 per cent of the audience are contributing more than the three per cent minimum, with over a quarter contributing twice the minimum. The more you invest, and the sooner, the bigger your KiwiSaver portfolio will become. While it may feel a bit of a challenge to put in more than the
minimum, once you start you soon get used to it, and seeing your portfolio grow
is reward enough.

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*Data from Reserve Bank, February 2024.