New Zealanders love talking about property, but quietly in the background there’s another investment machine humming away: KiwiSaver.

With more than 3.3 million members and over $110 billion in assets as at March 2024 – rising to about $121.9 billion by December 2024 – KiwiSaver is now one of the most important investment vehicles in the country. 

If you’re serious about building wealth, especially if you’re juggling first-home goals, a mortgage and long-term investing, it’s worth understanding how KiwiSaver works with the rest of your portfolio – and when it’s smart to bring in a New Zealand–based investment adviser to help tie it all together.

KiwiSaver: more than just a “set and forget” fund

At its core, KiwiSaver is a voluntary, work-based savings scheme designed to help you build retirement savings, with the option to access funds early for a first home or in hardship. 

A few big numbers that show how significant it’s become:

• Total KiwiSaver assets reached $111.8 billion as at 31 March 2024, up from $93.7b a year earlier – around 19% growth in just 12 months.
• By December 2024, Morningstar data shows funds under management had climbed further to $121.9 billion.
• The average KiwiSaver balance is about $33,500 per member.

Put simply: a lot of your future wealth is likely to end up inside KiwiSaver. Treating it as an afterthought is a missed opportunity.

How contributions actually work (and how they’re changing)

Employee and employer contributions

If you’re an employee, you can currently choose to contribute 3%, 4%, 6%, 8% or 10% of your gross pay. Your employer must contribute at least 3% (before ESCT tax) on top, unless an exemption applies.

So even at the minimum settings, you often have 6% of your salary flowing into an investment portfolio every payday – before you even think about side investments.

Government contributions – and the 2025/26 changes

Right now (for the year ending 30 June 2025), eligible members can receive up to $521.43 per year in government contributions, as long as they contribute at least $1,042.86 themselves. 

But from 1 July 2025, a series of reforms kicks in: 

• The maximum government contribution halves from $521.43 to $260.72 per year.
• People earning over $180,000 of taxable income in a year will no longer receive government contributions.
• From 1 April 2026, default contribution rates for both employers and employees rise from 3% to 3.5%, and then to 4% from 1 April 2028.

These changes matter for investors because they shift the balance between “free money” from the government, compulsory employer contributions and your own contributions. They also make it even more important to check whether your contribution rate aligns with your goals.

Where KiwiSaver fits into a wider investment strategy

For most New Zealanders, KiwiSaver is:

• A foundation for retirement savings;
• A potential turbo-boost for a first-home deposit;
• A long-term, professionally managed, diversified portfolio sitting alongside things like term deposits, managed funds, direct shares and investment property.

Because you generally can’t touch KiwiSaver until 65 (except for first-home withdrawal and hardship), it behaves like a locked long-term growth engine in your portfolio.

That has some big advantages:

• Automatic contributions from your pay and employer;
• Professional management and diversification across assets like shares, bonds, property and cash;
• Behavioural benefits – you’re less tempted to “raid” it for short-term spending.

But it also means you need to think about how KiwiSaver and your other investments talk to each other. For example:

• If most of your wealth is tied up in your home and KiwiSaver, you might want extra flexibility through liquid investments (e.g. managed funds outside KiwiSaver).
• If you’re aggressively paying down a mortgage, you may want to make sure your KiwiSaver is invested appropriately so you’re still capturing long-term market growth.

This is where holistic advice from a Kiwisaver adviser can be incredibly valuable.

Three key KiwiSaver decisions every investor needs to get right

A lot of your outcome in KiwiSaver comes down to a few big levers.

(a) Contribution rate vs other priorities

Choosing between 3%, 4%, 6%, 8% or 10% doesn’t just change your future balance – it changes your cashflow today.

• If you’re saving for a first home, you might opt for a higher KiwiSaver contribution to build your deposit faster – especially if your employer is also contributing.
• If you’re already carrying a big mortgage at a high interest rate, there’s a real trade-off between extra KiwiSaver contributions and extra mortgage repayments.

This is exactly the sort of modelling an investment adviser can help with – showing the impact of different contribution rates on both your KiwiSaver balance and your home loan over time.

(b) Fund type and risk tolerance

KiwiSaver providers typically offer conservative, balanced, growth and sometimes aggressive funds, each with a different mix of higher-risk (shares, property) and lower-risk (bonds, cash) assets.

The Financial Markets Authority (FMA) has highlighted that growth funds – with more shares and property – usually deliver higher returns over the long term, but with bigger short-term ups and downs; more conservative funds suit those closer to spending their money (for retirement or a first home) or those who find volatility stressful.

The right choice depends on:

• Timeframe (retirement vs first-home withdrawal in, say, five years);
• Your tolerance for volatility;
• What else you own – e.g. if you’re heavily exposed to New Zealand property through your home and rentals, you might want more global diversification in KiwiSaver.

(c) Fees and provider choice

KiwiSaver fees might sound small as a percentage, but across the system they’re huge: Morningstar estimates that across 21 KiwiSaver providers, annual fees were about NZ$980 million in the 12 months to December 2024.

Higher-fee funds need to justify their costs with consistently better after-fee performance. Otherwise, you’re simply handing over a larger slice of your investment returns each year.

A good adviser can help you compare:

• Active vs index (passive) strategies;
• Fee structures and performance;
• Whether you’re in a fund that matches your actual risk profile and goals.

KiwiSaver, first homes and mortgages

For many Kiwis, KiwiSaver plays two big roles:

1. Helping fund your first home, through the ability to withdraw most of your balance when you buy;
2. Building long-term retirement savings once you’re on the property ladder.

Those two goals can sometimes pull in different directions:

• To maximise your first-home deposit, you might lean into higher contributions and possibly a higher-growth fund while you’re many years away from buying.
• As you get closer to purchase, it often makes sense to dial down risk so a market downturn doesn’t wipe tens of thousands off your deposit just before settlement.
• Once you’ve bought, the question becomes: Do I boost KiwiSaver, pay down the mortgage faster, or start investing outside KiwiSaver?

A New Zealand mortgage broker and investment adviser is uniquely placed to help you:

• Map out a timeline: when you want to buy, when you might want to move or upgrade, and when you’d like to be mortgage-free.
• Align your KiwiSaver fund choice and contribution rate with that timeline.
• Structure your home loan (fixed vs floating, offset accounts, revolving credit) in a way that complements your KiwiSaver and other investments.
• Make sure you’re not over-exposed to one asset class (for example, New Zealand residential property) at the expense of diversification.

Final thoughts: treat KiwiSaver like the serious investment it is

KiwiSaver isn’t just a line on your payslip – it’s fast becoming one of the largest pools of capital in New Zealand, with billions flowing in each year and more reforms on the way. 

If you:

• Choose a contribution rate that matches your goals and cashflow
• Pick a fund that fits your timeframe and risk tolerance
• Keep an eye on fees and performance
• And make sure KiwiSaver is working with your mortgage and other investments

…you’ll be using one of New Zealand’s most powerful investment tools the way it was meant to be used.