Changing KiwiSaver providers or switching funds?

KiwiSaver is an integral part of Kiwis’ retirement planning. And perhaps, over the years, you might have contemplated whether you’re with the right provider for your needs. While there's no obligation to switch, understanding the process and the factors to consider can empower you to make an informed decision.

Switching providers vs switching funds

It's important to differentiate between changing providers and changing funds. Let’s break down the differences:

• Switching funds: When you opt to change funds, you're essentially moving your investments from one type of fund to another within the same KiwiSaver provider. Each fund will have its unique risk and return profile, based on the assets it's invested in. For instance, moving from a conservative fund to a growth fund means you're shifting from a low-risk, low-return profile to a higher-risk, higher-return prospect.
     
  What are the risks? If you're considering switching funds, it's crucial to ensure the new fund aligns with your risk tolerance and long-term goals. For instance, shifting to a higher risk fund might offer potentially higher returns, but it also comes with increased volatility. If you're nearing retirement or planning to use your KiwiSaver savings soon, such a  move might expose your savings to potential short-term market downturns. Instead, consider your long-term financial goals, risk appetite, and investment horizon when deciding on a suitable fund.
• Switching providers: This entails moving your entire KiwiSaver investment from one provider to another. Your motivation could stem from various reasons, such as better customer  service, lower fees, or a wider range of investment options. However, it's still vital to assess the pros and cons, review the track record, and ensure the new provider aligns with your financial aspirations.

What are the factors to consider?

If you are trying to decide whether to switch funds or providers…these are some things to consider:

• Historical performance: While past performance isn’t indicative of future performance, looking at how your fund has performed over the past five years or longer compared to other similar funds can provide some insights. 
• Fees: Every KiwiSaver scheme has associated fees, which can differ significantly among providers. Even a small percentage  difference in fees can have a substantial impact over the years. So, regularly assessing the fees you're paying and comparing them with the industry average is another factor to consider.
• Service and communication: A responsive provider that communicates effectively can be crucial, especially when you have queries or concerns. If your current provider is lacking in customer service or doesn't offer clear communication, you might contemplate a change.
• Ethical considerations: Many KiwiSaver members are now looking at providers that invest in ethical or socially responsible funds. If this aligns with your values, you might  consider switching to a provider that prioritises ethical investments.

The process of changing providers

Start by investigating potential providers. Look in to their fee structures, performance history, customer reviews, and any other factor that’s vital for you. 

If after all your research you decide that changing providers is right for you, you’ll typically fill out an application form with the provider you have decided is right for you. This form generally requires you to provide your personal details and your IRD number. 

Your new provider will then inform your old provider and Inland Revenue of the switch. They’ll handle the transfer of your funds. 

All in all, the process of switching can take a few weeks. However, during this period, your money remains invested. 

Like to talk?

While there’s certainly no pressing need to change your KiwiSaver investment provider, staying on top of things allows you to make choices that align best with your financial goals. 

If you’d like to review your options, get in touch. Regardless of whether you choose to switch, it’s a step towards proactive financial management.

The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.