Two simple steps towards a better retirement

Media Release
MR 2016 - 26
9 September 2016

New research has revealed many New Zealanders could be just two simple steps away from a better retirement.

The Commission for Financial Capability and the Financial Markets Authority are urging people to give their KiwiSaver accounts a double shot of attention during Money Week so they don’t miss out.

The organisations ran a joint snapshot survey asking how much KiwiSaver members knew about the fees they were paying and the returns they were getting.

The answer: not enough. More than two thirds didn’t know how much their fees cost and nearly half were unsure what their KiwiSaver investments earned them this year.

The Commission’s investor education group manager David Boyle said: “If you think it’s not a big deal understanding the impacts of your fees and returns, you might change your mind when you find out what a difference both could make to the lump sum you end up with when you retire.”

When prompted to think about it, just over half agreed that fees and returns were equally important in reaching their retirement goals.

The FMA’s Director External Communications and Investor Capability Paul Gregory said: “It’s good to see people recognise that, now we want them to do something about it. The reason for doing this survey was to prompt them to think about two of the most important factors in their KiwiSaver scheme - the fund they are in and how it performs, and the fees they are paying for those returns.”

Over a lifetime of contributing to KiwiSaver, the average amount paid in fees is around $40,000.

In return, you could end up with $357,000 in your retirement pot if you save from 18 to 65* in a balanced fund. That’s enough to pay for 30 years of groceries for a couple in retirement – and still have more than $50,000 left over for a bit of fun.

The cost of fees could go higher – or lower - than $40,000, depending on what your provider charges. The trick is to look at similar funds to yours and see how the costs compare and what sort of investment returns they have earned.

David said: “Most of us are pretty careful about other kinds of fees – you wouldn't take on a real estate agent without finding out what it was going to cost you. Nor would you pay someone $60 to mow your lawns if you could get it done for $40 – unless they trimmed your hedges too. So why pay KiwiSaver fees without knowing how much they are and what you are receiving over and above the cost of managing your money?”

It’s easy to find out what different KiwiSaver providers charge by using the fund finder on Sorted.

But it’s given as a percentage and many people say it is not easy to understand what that means in hard cash - 94% of those surveyed would like to see a dollar amount on their annual statement.

Work is underway by the FMA, CFFC and MBIE to require providers to show this information in the future.

The survey also asked people if they expected their fees to go up as they saved more: nearly two thirds said they expected them to stay the same.

David said: “This shows people may not understand how the fees are charged on their investment, but it’s also important for KiwiSaver members to look at the returns after fees.”

An increasing number of KiwiSaver members were aware of the sum in their account with almost 90% saying they knew, to the nearest $5,000, how much money they had.

At least two-thirds were able to give some indication of how they expect their fund to perform in the year ahead, though women were more uncertain than men – or more unwilling to take a guess.

Money Week this year is all about planning and the most important consideration for KiwiSavers is to work out what you are saving for and what target you want to reach.

Once you’ve got your plan in place you can make sure your fund choice is appropriate for your circumstances and will help you meet your goal.

The fees you pay are the one constant factor in terms of the overall result you will see in your account. Both the FMA and CFFC agree that you cannot look at your KiwiSaver fees or the returns from your fund in isolation, because these are key components that make the most impact on reaching your retirement savings goals.

Paul said: “It’s great to see that given some choices on what they could do to get the best out of their KiwiSaver for their future selves, most people wanted to check on their investment fund and compare it with other funds.”

Getting people more connected with their KiwiSaver is what Money Week is all about.

*Assumptions based on someone in a balanced fund earning an average of $60,000 over their working life from 18-65, making 3% contributions matched by their employer.

Full survey here

Media contact:

CFFC - Jane Luscombe m +64 21 76 79 70, email

FMA - Andrew Park m +21 220 6770, email