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Personal finance editor Amanda Morrall looks at kids in KiwiSaver and the problem of stagnating accounts threatened by fees and low returns

Personal finance editor Amanda Morrall looks at kids in KiwiSaver and the problem of stagnating accounts threatened by fees and low returns

By Amanda Morrall

More than $300 million of taxpayers money invested in the form of $1,000 kickstarts for junior KiwiSavers is at risk of slow erosion due to stagnant balances being eaten away by fees.

Although Inland Revenue does not track the number of non-contributing junior accounts (that is those under the age of 18) providers say the vast majority are idling at just over or under the $1,000 mark because no contributions have been made other than the $1,000 kick-start received at the time of enrolment.

ANZ Wealth's David Boyle, who oversees KiwiSaver schemes run by OnePath, said balances among the 90,000 junior KiwiSavers with the default provider ranged between $950 and $1,250 owing to the fact that parents weren't adding to the accounts.  He said it was unfortunate more parents weren't taking better advantage of the scheme to build their children's retirement savings funds or help set them up for the purchase of a first time home.

"You have to remember this is a retirement savings scheme, first and foremost, that's what it was set up for but most parents seems to have just forgotten about it since collecting the $1,000 kick-start.''

Because fees on different KiwiSaver funds vary so widely, some balances will have gained while others have lost. It also depends on the rates of return generated by those funds over the period of time invested.

KiwiSaver Calculator

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Boyle said the balances on junior KiwiSavers with OnePath were relatively strong given the markets have been so volatile since the retirement savings programme was rolled out in 2007. He said one of the reasons they stood up as well as they have was that the fees were so modest. OnePath charges an annual fee of $26 in addition to a management expense ratio which differs according to which type of fund a person is invested in.

According to the 2011 KiwiSaver report produced by Inland Revenue there were (as of March 31, 2011) 3,948 kids under the 18 enrolled in default funds and 291,058 in "other funds.'' 

In general terms, default funds have the lowest fees because they are conservative in nature; that is they are compromised mainly of cash and fixed-interest assets such as bonds. The rationale for the lower fee is that they take less time and skill to manage. That compares to higher risk growth and aggressive funds, which have a higher weighting of shares and which are "actively managed.'' 

In addition to the annual membership fees, which can vary from $26 to $60 a year, there are a host of other fees, the most costly being the investment management fee sometimes known as the management expense ratio (MER). This is a set percentage which comes off your total balance every year regardless of the fund's performance up or down.

To find your fund, check out's Find Your Fund section here. From there you can look up how much you are paying in fees, and compare it to other like funds. See also your fund's performance ranking for its peer group here.

To see the long-term effect of contributing and non-contributing to that account, taking into account fees and returns either negative or positive, check out our contributions calculator below, which downloads as an excel spread sheet so you can manipulate the variables to match your own experience in KiwiSaver.

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Govts forked out 300m as a total waste of money, this has gone beyond belief.  Borrow at 4.5% "invest" at -2%.  Is this some kind of sick joke? "This is a retirement ponzi, you have to keep putting money in, ponzi's don't work if you don't keep putting money in"  Come on please, I'd honestly feel too ashamed to invoice someone for destroying their product.  Somehow finance is the quantum physics of reality, normal rules do not apply here.  If I was transporting a ton of gravel, and half of it dissapeared en-route, whos cost is that?  Too bad, your fault for not putting more gravel in?  There is no satisfaction from not having enrolled myself or my family, we probably owe an extra $375 thanks to that little "stimulus" package. 

This is why Huljich and his mates Don Brash and John Banks are multi-millionaires thanks to the NZ taxpayer.  Signing up children and the unemployed to their KS scheme and then draining the Gov'ts $1,000 initial contribution in the form of fees.  If people set up a KS scheme and don't contribute then the Gov't contribution should be clawed back.

It is, just not by govt.

NZ is just full of gravy trains for lawyers, banksters and finance people (Lawyers love the Treaty claims process). It is just a complete con, if they are not returnng any money they shouldn't be charging any coin, it should at least earn a small interest rate. I am stuck in a prepetual loop in Oz, I worked there real briefly and I have about 400 bucks in a retirement scheme and every year it earns a small amount (nothing) and gets charged fees but are subject to a fee rebate of everything because it is in a low threshold, but the whole thing comes out at a big fat zero in gains.
(Edited for language/bh)

That was your donation to the ocker fund Bobob....multiply by a few million over the years and hey presto the secret balance sheet produces a fat return...the reports you get come from the cookery school where the BS balance sheets are kept.

Yeah well that really Sux if you ask me. I remember you used to hear about the old days when someone left some money in an account in the UK basically peanuts but over time it blossomed quite nicely into a pleasant surprise in 60 years time for the kids. I guess that will never happen now, someone saw the plebbians might get a bit of cash and soon put paid to that.

Thieves and govts..all the same...look at how the aussie govt recently stole all the money from the dormant superannuation accounts...hundreds of millions...pooooof

Sorry BH I will tame myself down.