"The KiwiSaver initiative was introduced by the Government in 2007 to help New Zealanders save towards their retirement.
"Individuals can start a KiwiSaver account in their own name and take it with them from job to job.
"KiwiSaver is not guaranteed by anyone, including the Government.
"The Government is responsible for setting the rules and regulations for providing a KiwiSaver scheme.
"Providers are supervised by independent trustees and the Financial Markets Authority exercises continuing oversight of the schemes.
"The New Zealand Superannuation Fund (NZSF) was established in 2003 to help pay for the future costs of superannuation entitlements.
"This will reduce the tax burden on future New Zealanders for the cost of New Zealand Super," says Body.
New Zealand Super is the benefit paid to New Zealand citizens and residents once they are aged 65 or older.
Depending on the individual's circumstances, payments range from about $14,000 to $18,500 a year.
Retirement savings such as KiwiSaver help top up income once you reach 65.
It has been estimated that between 2005 and 2050 the number of New Zealanders over the age of 65 will double, also doubling the cost of providing New Zealand Super payments.
"The NZSF invests money on the Government's behalf and the fund is managed by a crown entity - the Guardians of New Zealand Superannuation," says Body.
"The fund is now worth about $25.5 billion.
"While both the NZSF and KiwiSaver play an important role in building up the nation's retirement savings pool, they are very different.
"Essentially the NZSF has one customer - the Government. KiwiSaver on the other hand has over 2.2 million individual accounts and almost $17 billion in funds.
"Each account requires administration, IT infrastructure, customer service and communications teams.
"The money in your KiwiSaver account is locked in until retirement, but that money still needs to be available at any time because an individual can transfer to a different provider."
KiwiSavers can also tap some of their funds to buy a first home or for assistance during a time of financial hardship.
"Having the money available, or on call, means that it must be invested in liquid investments that can be converted to cash and returned to the investor," Body says.
"This means that investment managers for KiwiSaver providers must follow different strategies, and invest in different sorts of assets compared to the Guardians of the Super Fund."
Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.
To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail com.
