KiwiSaver Explained Simply
A visual, story-based guide to understanding how KiwiSaver actually works. With real numbers and examples.
Let's Follow the Money: Sarah's Story
Sarah, Age 28
Earns $70,000/year at a marketing agency in Wellington
Sarah joined KiwiSaver when she started her job. Let's see exactly where her money goes and how it grows over time.
Payday: Money Leaves Her Account
💡 Key Point: Sarah contributes 3% (the minimum). She could choose 4%, 6%, 8%, or 10% if she wants to save more. Her $81 comes out before tax, which means she gets a small tax benefit.
Employer Adds Free Money
💰 Free Money: Sarah's employer must match her contributions up to 3% of her salary. This is compulsory by law - every employee gets this.
Annual total: $162 × 26 pay periods = $4,212/year($2,106 from Sarah + $2,106 from employer)
Government Adds Even More Free Money
🎁 How it works: The government adds 50 cents for every dollar you contribute, up to $521 per year. To get the full $521, you need to contribute at least $1,042/year.
Sarah contributes $2,106/year, so she gets the full $521. This is free money for saving for retirement!
Money Gets Invested
Sarah chose the Simplicity Growth Fund (0.31% fees, 9.5% average return). Her money doesn't just sit there - it's invested in:
Sarah's Money Over 5 Years:
When Can Sarah Access Her Money?
✅ Sarah CAN Withdraw For:
- •First Home (after 3 years): She can withdraw everything except her $1,000 kickstart and government contributions
- •Retirement (age 65): She can withdraw all of it, or leave it invested
- •Significant Financial Hardship: In extreme cases (very strict criteria)
- •Serious Illness: Life-shortening condition
❌ Sarah CANNOT Withdraw For:
- •Car purchases
- •Holidays or travel
- •Debt repayment (except mortgage)
- •General living expenses
Remember: KiwiSaver is locked until retirement (or first home). This helps ensure you have money for your future!
The Big Picture: Sarah at Age 65
If Sarah keeps contributing 3% (matched by employer + government) from age 28 to 65 (37 years) with average 7% returns after fees:
Key Takeaways
✅ The Good Stuff
- • Employer matches your contributions (free money)
- • Government adds up to $521/year (free money)
- • Money grows through investments
- • Automatic savings - you don't think about it
- • Can use for first home after 3 years
⚠️ Things to Know
- • Money is locked until 65 (except first home/hardship)
- • You pay fees (typically 0.3% - 1.2% per year)
- • Investments can go down as well as up
- • You need to choose the right fund for your age
- • Minimum 3% contribution required
What Should You Do Next?
1. Compare KiwiSaver Providers →
Find the best fund for your situation. Compare fees, returns, and features.
2. Understand Risk Levels →
Learn which fund type (conservative, balanced, growth) is right for your age.
3. Calculate Your Retirement Savings →
See how much you'll have at retirement based on your current contributions.
Note: All numbers are examples based on current KiwiSaver rules as of October 2025. Actual investment returns will vary. Past performance does not guarantee future results.
Sources: Inland Revenue (KiwiSaver contribution rates), FMA (average fund returns), Government KiwiSaver website.