Retirees told to take more care in planning how to use KiwiSaver funds

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Sixty-six-year-old Bruce Marshall has no plans to pull his money out of KiwiSaver yet.

In recent years, he’s moved the savings to a more conservative fund but is still working and contributing to his account with Kiwi Wealth.

“I hope to have quite a nice nest egg when I retire,” he said. “I’m not planning to retire for another year or so.”

But what to do with your money once you are allowed to touch it is becoming more of a concern for many.

ASB general manger of wealth Jonathan Beale said the focus for the first 10 years of KiwiSaver had been on getting people in and contributing to grow their savings.

“Now they are reaching 65 and retiring, what do they do? If you look at the statistics, if you live to 65 you’re probably going to live another 25 or 30 years. How are you going to use your KiwiSaver to fund that retirement? You don’t hear much about that.”

In the June 2017 year, 107,000 people closed their accounts because they retired, according to Inland Revenue.


Beale said ASB saw many customers continuing to put money into their KiwiSaver accounts after they turned 65. Employers do not have to continue their payments into the scheme when members are past the pension age but there is no restriction on members who are already in the scheme making their own contributions.

David Boyle, of the Commission for Financial Capability, said 45 per cent of people aged over 65 were working either full- or part-time. If you can afford to continue your contributions, that will help bolster your balance for when the time comes to tap into it.


The closer you are to needing your money, the more conservative a KiwiSaver fund you should be in.

When the investing time period is shorter, you have less ability to ride out the market volatility of riskier investment assets.

But just because you’re 65, it does not automatically mean you need to shift to the most conservative fund you can find.

If you won’t need to rely on the money for 10 years, or you need it to last 20, you might opt to keep at least part of your fund invested in growth assets.

“Consumers need to understand it’s not just about growing the fund until you’re 65, it’s your whole life,” Beale said.

“The choice of conservative may not be the right one for everyone,” said Ana-Marie Lockyer, general manager of wealth products and marketing at ANZ. “That’s a short-term horizon but people are living a lot longer.”

Boyle said people needed to keep their money working for them to make it last over several decades. But getting the right asset allocation would be important. He recommended savers seek advice, either from their KiwiSaver provider or an independent financial adviser.

Sometimes a pick and mix approach would be best, he said, with some portion of the money in conservative funds to provide some short-term certainty and some in riskier assets to grow over a longer term.  “It’s about enjoying that journey and making sure your money lives as long as you do.”


Research shows many people intend to withdraw their KiwiSaver money and put it into bank term deposits.

But Beale said that was not always the best decision. Term deposits still offer relatively low interest rates, and over time inflation would eat away at the value of that money.

Savers could instead leave all or some their money in their KiwiSaver accounts, where the fees would be cheaper than in most managed funds. They could change the fund to suit their needs, potentially choosing one with an income focus or tweaking the risk level to match their risk profile.

If you want to move to a new KiwiSaver provider, you need to do that before you turn 65. At the moment, people over that age cannot start a new KiwiSaver account or switch to a new provider.

Many providers offer members the option of a regular withdrawal from their funds into their bank accounts.

Boyle said: “That helps smooth out some of the bumps of their retriment years.”

Lockyer said a third of KiwiSavers took their whole balance out when they retired.

Of the remaining two-thirds, 10 per cent were taking regular withdrawals to top up their income. “As balances grow it will be important to be really clear how you’re going to use that money.  Don’t just take it out unless you know what you’re going to do with it and that’s part of the plan.”

There are also options such as Lifetime Retirement Income’s variable annuity, which offers guaranteed income for life. KiwiSaver provider Simplicity also has an option designed to supplement NZ Super. But Beale said investors needed to realise they were paying for that certainty. “You’re basically giving up all control.”