Many New Zealanders stay with their default KiwiSaver provider without ever considering whether it is the right fit. Yet switching providers is free, simple, and can make a meaningful difference to your retirement balance over time.
Understanding when and why to switch helps you take an active role in managing your retirement savings effectively.
When Switching Makes Sense
The most common reason to switch is finding a provider with lower fees for similar investment returns. Fee differences compound significantly over decades, so even small savings matter.
Investment philosophy is another valid reason. You might prefer a provider focused on ethical investing, passive index funds, or active management depending on your values and beliefs.
Poor service or communication from your current provider is also a legitimate reason to move. You want a provider that keeps you informed and responds helpfully when you have questions.
The Switching Process
Switching is free and relatively simple. Contact your new chosen provider and complete their transfer form. They will handle the transfer process with your current provider.
The transfer typically takes 10 to 20 business days. During this time, your funds remain invested with your current provider until they transfer to the new one.
You do not need to notify your current provider. The new provider manages the entire process once you complete their paperwork.
Comparing Provider Fees
Fees are usually expressed as a percentage of your balance plus sometimes a fixed dollar amount. A fund charging 0.5 percent costs $500 per year on a $100,000 balance.
Compare total fees rather than just management fees. Administration fees, entry fees, and other charges add to the total cost of your KiwiSaver.
Fee comparison sites and tools can help you understand the true cost of different providers. Small percentage differences create large gaps over 30 or 40 years of saving.
Performance Considerations
Past performance does not guarantee future results, but looking at long-term track records provides some insight into provider and fund management quality.
Compare returns over five or ten years rather than just recent performance. Short-term results can be misleading and driven by market conditions rather than fund management skill.
Consider returns after fees. A high-returning fund with high fees may deliver less to your pocket than a moderate-returning fund with low fees.
What You Lose When Switching
Generally, you lose nothing by switching KiwiSaver providers. Your balance transfers in full, and your membership history remains intact.
Some providers offer loyalty benefits or fee discounts that may be lost when leaving. Check whether your current provider has any benefits tied to length of membership.
There may be a brief period during the transfer when your money is not invested. This market exposure gap is typically minimal but exists during transfers.
Staying With Your Current Provider
Switching is not always the right answer. If your current provider has competitive fees, good returns, and meets your needs, staying put avoids any transfer complexity.
Sometimes switching fund types within your current provider addresses your concerns. Moving from a conservative to growth fund, or finding an ethical option, may solve the problem without changing providers.
Consider the effort involved relative to the benefit. If the fee saving is minimal and you are happy with service, the disruption may not be worthwhile.
Making The Switch Decision
Calculate the potential fee savings over your remaining years until retirement. Even $50 per year in fees saved compounds to thousands over decades.
Read reviews and research potential new providers thoroughly. Ensure they offer the fund types and service levels you want before committing to a switch.
Check whether your employer has any preferred provider arrangements. Some employers contribute to specific providers or offer additional benefits through particular schemes.
Regular Provider Reviews
Rather than switching repeatedly, establish a habit of reviewing your KiwiSaver annually. Check that your fund choice still suits your circumstances and compare fees with alternatives.
Your needs change over time. A growth fund that suited you in your twenties may be inappropriate approaching retirement. Regular reviews ensure your KiwiSaver remains optimised.
When you do identify a clearly better option, do not hesitate to switch. The free, straightforward process means there is no reason to stay with an unsuitable provider.
Need Help With Your KiwiSaver?
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