Diana Clement: Five reasons you should review your KiwiSaver

An independent financial adviser can help you with your choice of KiwiSaver.

Is it time for a health check of your KiwiSaver? Everybody should review their retirement savings every year or two. Sleepwalking is never good when it comes to finances.

Just be wary this year of assuming a balance below that of December 2021 means it’s a bad fund. Markets have fallen the world round over the past 12 months. A balance in the doldrums isn’t in itself a reason to worry. If, however, a fund is falling compared to equivalent funds, or your reaction to falling values is off the scale, then you might be in the wrong fund for you.

The world changes. No one predicted how KiwiSaver balances would soar after the initial lockdown in 2020, or fall in 2022. Nor can they say for sure when they’ll regain lost ground. Gyrations in prices can be a good wake-up call over how much risk an individual can tolerate. Just be aware that dialling down from growth to balanced or balanced to conservative shouldn’t be done if possible when markets have fallen. Anyone who found they couldn’t stomach the falls in their KiwiSaver this year, or the brief, but dramatic dive in 2020, should seek advice.

Your personal circumstances change. Life changes. We go on OEs, start or end relationships, have children, buy homes, and slowly inch our way towards retirement. As we cycle through those different life transitions, our KiwiSaver needs may change. That may mean switching up to growth, or down to balanced or conservative at the right time. Anyone in a default fund really needs to make an active choice. For people who want a set and forget KiwiSaver as they age, then a life stages fund may work. This transitions the money from growth to balanced to conservative as the member ages. AMP, Generate, Lifestages, and other KiwiSaver providers offer this type of fund. The downside of this is that this approach to KiwiSaver may be a one-size-fits-all and not take into account individuals’ personal circumstances. But life stages funds can be a fallback position. At the other end of the scale, many providers and funds focus on niche areas such as meeting the needs of Christian and Muslim investors.

Rules change. The rules haven’t changed much for KiwiSaver, although the $1000 free kickstart was removed in 2015, and there have been tax changes along the way.

Even so, it’s worth keeping abreast of changes and the effect they could have. The First Home Grant house price and income caps have changed over the years. An increase might mean some first-home buyers previously excluded will now qualify, and would benefit from contributing if they have taken a savings break.

Funds and providers change. Personally, I’ve become increasingly aware of sustainability options for KiwiSaver. Where once only baddies such as tobacco investments could be screened out, funds are becoming increasingly active in their ability to screen for good. It’s not just sustainability. Many new KiwiSaver providers enter the market offering more choices. For example, Kernel launched its KiwiSaver plan in 2022 and allows members to build their own KiwiSaver mix of investments from a range of different funds. Other new KiwiSaver entrants in the past few years include fund supermarket InvestNow, and ethical fund provider Pathfinder Asset Management.

Your ability to contribute changes. Most people who join KiwiSaver make minimum contributions of 3 per cent, which if they’re employed is matched by the employer. As time goes on there may be reasons to increase that percentage. Those saving for a home might do this. Or with retirement looming, some people get a wake-up call. On the other hand, if there is uncertainty on the horizon, KiwiSavers might want to hive off more money into an emergency fund outside of KiwiSaver. It can be difficult to make hardship withdrawals from KiwiSaver.

Multiple websites help you identify and compare KiwiSaver providers, taking into account the matrix of factors that need to be considered. Those websites include Sorted.org.nz, the Financial Markets Authority’s KiwiSaver tracker, Canstar.co.nz, Mindful Money.co.nz, and others.

In addition to choosing conservative, balanced, growth or other “asset allocation”, any review of KiwiSaver needs to consider your financial values, risk tolerance, medium and long-term goals for the investment, and other investments owned.

Some KiwiSaver providers offer financial advice, or independent financial advisers can also help individuals make the right choice for them.