KiwiSaver is 10 years old and has delivered a $29 billion birthday gift to its members, says Milford Asset Management.

There was room for improvement with the savings scheme, however, it had been a tremendous success, the provider said.

"The brilliance of KiwiSaver lies in the fact there is more than one entity contributing to an investor's account," the company said.

If an individual contributed to a KiwiSaver fund, their employer and the government also contributed and the pooled fund earned investment returns.


"This powerful combination is evidenced by the fact that since 2007 investors have contributed $17 billion of their own money and have received a massive $29 billion in gains."

Sir Michael Cullen discusses Kiwisaver

The gains were composed of $10b employer contributions, $8b government contributions, and roughly $11b of investment returns achieved by KiwiSaver providers. There had also been $5b in member withdrawals during this time.

Putting in $17b over the course of 10 years and receiving $29b in gains "is a fantastic deal".

"In addition to diversifying Kiwis' wealth outside of property, KiwiSaver has been an excellent vehicle to help create additional retirement savings for thousands of New Zealanders."

However, research by KiwiSaver provider AMP this month suggested many of the people who do not contribute to KiwiSaver on a regular basis are on a low income or are not in paid employment.

More than 2.7 million Kiwis are signed up to the retirement scheme but 1.1 million were considered to be non-contributors in the year to March 31, 2017.

That means that while those people are signed up to the scheme they don't contribute to it regularly. Of those 1.1 million, 428,836 were either children, aged 17 and under, or over 66 years of age.

The research from AMP could give some clues as to why the other 670,000 working-age adults are not putting money into the scheme.

It surveyed 500 non-contributing members and found 80 per cent had a personal income of less than $50,000 and half (48 per cent) had a household income of below $50,000 - well below the national average of $98,000 for households.

It also found non-contributors were more likely to be younger and not in paid employment.

Of those surveyed, 46 per cent of non-contributors were between 18 and 35.

According to Statistics New Zealand, only 7 per cent of 18 to 24-year-olds were in full-time employment.

The research found 49 per cent of non-contributors were not in paid employment. Of those not in paid employment, 40 per cent were home-makers, most of whom were women.

Blair Vernon, chief executive of AMP Financial Services, said it appeared that KiwiSaver was working for those on middle and high incomes but not for all.

"It feels like it is not addressing a prosperous retirement for everyone, which I think we should be aiming for."

Vernon said there needed to be lower and more graduated entry points for people to begin contributing to KiwiSaver.

Currently the minimum KiwiSaver contribution rate was 3 per cent but Vernon said there should be options to start contributing at 1 per cent and 2 per cent - "3 per cent is just too tough".

For those struggling already, Vernon said the idea of taking a 3 per cent pay cut to get another 3 per cent from their employer was not attractive to people who could not see any instant benefit.

His view bucks that of the Retirement Commissioner who, in 2016, recommended the Government increase the minimum contribution rate to 4 per cent to help increase the amount people were saving.

Aaron Gilbert, an associate professor in the finance department at AUT University, said while lowering the contribution rate appeared attractive on the surface, it had serious flaws.

"At the current minimum of 3 per cent, many people will likely have a significant gap in their retirement savings," Gilbert said.

"Reducing the contribution rate will exacerbate this problem."