The Herald's Cooking the Books personal finance podcast is here to get you the tips you need to weather the financial storm. Hosted by Frances Cook, with a new money expert featured on each episode.

In times of crisis it's easy to fixate on the worst-case scenario.

It's particularly easy to do with KiwiSaver. All of us know it's important, but we're often fuzzy about what the rules are, and who can take your money.


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A bit of uncertainty can breed a lot of fear, as our brains try to help us "solve" these blank spots by imagining everything that can go wrong.

So here's what can, and can't, happen to your KiwiSaver.

The Government can't take your money

Not under the current laws anyway, and good luck to any government that tried to change it. The Opposition would give them merry hell, knowing it would be a surefire vote winner.

KiwiSaver is a scheme set up by the Government, and the Government makes the rules for it, but it never touches your money.

Instead it's handled by your KiwiSaver provider, usually a bank or investing company that has been cleared to take part in the scheme.

But even they don't have your money. The details can change between funds, but the money itself is usually held by a "custodian".

New Zealand investing funds use custodians as a supervisor of the process. It's a system put in place by the Financial Markets Authority to stop us all getting ripped off.


On the latest Cooking the Books podcast Public Trust CEO Glenys Talivai said their job was to first make sure the fund didn't get into trouble at all, and then to protect your funds if anything did go wrong.

"You have this additional reassurance that there's a supervisor there to make sure that the scheme manager you've chosen is doing everything that they should be doing."

So even though the Government is giving out wage subsidies and increasing amounts of JobSeeker Support benefits, it won't raid your retirement savings to pay for it.

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If the KiwiSaver provider tanks, your money is safe

As safe as anything is in the financial world anyway – I'd call my savings account at the bank safe as well, even though I know terrible unexpected events can happen.

If the worst happened and your KiwiSaver provider went under, your investments still exist. After all, they're under your name.

"We hold the money in custody, and it's held in individual members' names," Talivai said.


"If a scheme manager failed, which is unlikely but could happen, we would be holding that money. Then individual members would be able to claim their balances back directly from us.

"It's completely separate from the scheme manager."

There might be an unpleasant wait while financial affairs are untangled but, after that, the most likely outcome is that your KiwiSaver would be transferred to a different provider of your choosing.

Your provider and the supervisor can't save you from the market going down

Nor should you want them to.

Even a conservative KiwiSaver has likely gone down a little recently, and the growth and aggressive funds have bounced around all over the place.


That's just a reflection of our economy going through a rough patch. If you want to paddle in the financial world, you'll get wet feet.

All you can do is decide what level of investment risk you're happy with, and which provider you think is best, then buckle up for whatever happens in our economy.

But I go back to my initial point – I certainly wouldn't want my investment fund to "protect" me from when KiwiSaver goes down. When the markets go down is the time when those with a long time until retirement actually make money.

See previous columns and podcasts for more on that.

…but it won't go to zero

It's possible for your KiwiSaver balance to fall all the way to zero, in the same way that it's possible a meteor could hit the Earth and wipe out all life. It's technically on the table, but it's really not going to happen.


For your KiwiSaver balance to fall to zero, every single investment and business would have to become worthless. It would be an economic crash so bad, civil society would have fallen apart, and the last thing you'd be worried about would be your KiwiSaver.

KiwiSaver funds invest in hundreds of companies at once, on your behalf – that's one of its wonderful strengths.

So although some businesses may fall victim to Covid-19, others are going from strength to strength. Those ones are worth more than ever.

"Shares are spread across a range of countries, companies and a range of sectors," Talivai said.

"To have a KiwiSaver balance reach zero, or even near that, every single asset that the fund holds would need to have lost all its value.

"Even in the 1929 sharemarket crash that led to the Great Depression, shares did not reduce to zero value."


KiwiSaver isn't just invested in businesses; even growth funds have some amount in cash. Our dollar isn't going to become worthless either.

When the economy takes a dip, so does the value of your KiwiSaver. If you hold tight, when the economy eventually comes roaring back, so will the value of your fund.

Listen to the full interview on the Cooking the Books podcast. You can find new episodes on Herald Premium, or subscribe on iHeartRadio, Apple podcasts app, or Spotify, or wherever you get your podcasts.

If you have a question about this podcast, or question you'd like answered in the next one, come and talk to me about it. I'm on Facebook here, Instagram here and Twitter here. The Government's official Covid-19 advisory website