Why your KiwiSaver provider matters more than you think

Tuesday, 7 April 2026

Michael Cullen’s KiwiSaver has been successful during its almost 20-year existence, writes Martin Hawes, but people need to be on their toes when thinking about their providers.

Martin Hawes is a financial writer and presenter. He is not a financial adviser, and the information and opinions here should not be taken as financial advice.

OPINION: KiwiSaver has been a stunning success. Since its inception in 2007, it has grown to nearly 3.5 million members with $140 billion under management and, I would guess, it has helped significantly to improve financial literacy.

One problem that remains difficult is choosing the right fund. Unless you have good skills, access to research, and/or put in a lot of time, you are likely to find it hard to make your choice. Most people already have the important idea that the right amount of risk is critical and, fortunately, there are plenty of online calculators to help decide whether to be in a conservative, balanced or growth fund.

However, choosing which provider, of the nearly 30 schemes on offer, is a pig in a poke.

If you think that we are doing reasonably well in choosing the right provider, have a think on this: the KiwiSaver scheme with the most money is ANZ Bank, which has $23 billion under management. Given that they manage more money than anyone else, you would think they would be the best performer – that is, you’d think that people have flocked to ANZ because it has given such good returns.

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However, when I look at the latest survey from Morningstar, I find the opposite: over the last 10 years, the ANZ Balanced fund is 16th of 17 funds, and their Growth fund is 13th of 17. According to the Morningstar survey ended December 31, 2025, these two ANZ funds had over $9 billion between them – that seems a lot of money in KiwiSaver accounts that are underperforming.

Far from people flocking to ANZ for its superior performance, my guess is ANZ has the most because it is New Zealand’s biggest bank.

In fact, ANZ probably has the biggest KiwiSaver market share because it has so many customers who, in a fit of laziness, simply leave it with the bank. These people are not with these ANZ funds for any reason other than apathy.

I am not picking on ANZ’s KiwiSaver offer because banks make an easy target to have a go at – there are, after all, worse performers than they are. Instead, it is because ANZ has the most money and does not perform well. I pick on ANZ because its big market share is not deserved.

That is less ANZ’s fault and more the fault of the people who have stuck with the bank through years of underperformance. You should not curse your fund manager – being in a good fund is your responsibility, and it is easy to switch.

It seems to me that, with the average KiwiSaver account near $40,000, and with more money now being contributed, it is well past time for Kiwis to be doing some work to ensure they are in a decent fund.

We will not all be able to be in the No. 1 fund – and, indeed, I do not think that such ambition is the right target. Instead, I think you should look for a solid, consistent performer, which you hope will be in the top 25% of funds over most periods, instead of in the bottom 25%.

There is not an awful lot of help to decide which provider to choose. Nevertheless, everyone with a KiwiSaver should consider the quarterly Morningstar survey and look at the performance of the various KiwiSaver funds that have a fund in your chosen risk profile. Morningstar provides this survey free, and it shows performance of most of the funds in each risk category, the funds’ performance compared to all the other funds, and gives this data across a range of time periods: three months, one year, three years, five years and 10 years.

When I look at these, I look at the longest period first – that is the most important gauge for consistency – and then I look at the shorter time periods to check that a fund is still performing.

Of course, these are past returns and should come with the usual warnings. Nevertheless, they do show whether providers have performed consistently in the past.

The second thing to look at would be www.sorted.org.nz. Their fund finder looks at three things: cost (ie, fees), services and past returns. This is also well worth a look.

Your bank’s KiwiSaver scheme is not the right fund simply because it is your bank. Chances are you now have a significant amount of money in your KiwiSaver; choosing the right fund is important as your account balance rises. More money will lead to higher account balances – and higher still if you put in the time, effort and energy to find yourself a decent fund.