Milford Asset Management and Kiwi Wealth, a sister company to Kiwibank, also saw strong growth - up 9.2 per cent and 6.4 per cent respectively.
Mercer New Zealand had the slowest growth rate over the quarter, increasing its funds by 3.8 per cent to $1.562b.
But while the total amount looks impressive, individual saving are still relatively small.
Based on Inland Revenue figures 2,727,675 people were signed up to KiwiSaver in March, putting the average balance at $14,903.
David Boyle, group manager education at the Commission for Financial Capability, said that on the surface KiwiSaver looked as if it were going well.
"But scratch the surface and there are some significant concerns and issues that need to be addressed to really get KiwiSaver delivering to its true potential."
Boyle said the average balance was affected by the number of under 18-year-olds in the scheme who did not have much in their accounts.
"Most were signed up when the $1k kickstart was available and talking to a number of providers very few of these members are making any regular contributions until they reach the age of 18. So this affects the average balance."
About 360,000 members are under 18.
Boyle said about 580,000 people, another group, were not getting the full government subsidy which meant they were contributing nothing or less than $1043 a year.
He said KiwiSaver providers needed to do more.
"Providers need to keep working on getting their members connected to their KiwiSaver account, especially those that have not made contributions but are eligible for the member tax credit."
Claire Matthews, a KiwiSaver expert at Massey University, said it was hard to judge whether the $40b figure was a reason for celebration because people might have saved that money regardless of KiwiSaver.
"We don't know what people would have saved without that."
Matthews said an average balance of less than $15k did not sound a lot but it depended on the age of the person.
"For someone aged 60 - if that is all they have saved it's not great," she said.
But for someone in their 20s it was a good start which would now benefit from compound interest.
Matthews said the Government needed to increase the minimum contribution rate to help boost balances.
She believed individuals should contribute 10 per cent of what they earned. The current minimum is 3 per cent.
Richard Klipin, chief executive of the Financial Services Council, said the average balance of between $14,000 and $15,000 was a start.
"Like most developing countries we have got to start somewhere."
But he said it was not enough and it opened up the need for greater advice around how much was enough to live off in retirement.
Susan St John, co-director of Auckland University's Retirement Policy and Research Centre, said although average balances were growing, those at the low end would likely not have much at retirement.
"Not only have withdrawals for housing accelerated, but many struggling families are having to access funds under hardship claims.
"Many of those under the median will have very small amounts, if any on retirement."
On top of that issue she said male median balances would outpace female balances.
