The average KiwiSaver balance has passed $40,000 for the first time and that figure is expected to increase over time, according to New Zealand’s financial markets regulator.
The Financial Markets Authority - Te Mana Tātai Hokohoko (FMA), released its annual KiwiSaver report on Thursday, covering the year to March 31, 2026.
FMA head of investment management Emelie Jensert told interest.co.nz that for many people, KiwiSaver will be one of the largest financial assets they hold in their lifetime.
Jensert said when it came to the average KiwiSaver balance, which increased to $40,340 compared with $36,349 a year earlier, you would expect balances to increase over time as more people join KiwiSaver and others remain invested in KiwiSaver for a longer period of time.
Withdrawals for first home purchases reached a record high this year
When it came to withdrawals, KiwiSaver members took out $6.8 billion in the year to March. This was an increase of 15.7% compared to last year.
The report said this reflected a growing number of people accessing their retirement savings and record levels of people taking money out for first home purchases.
“Over the past five years, withdrawal activity has grown steadily as the scheme has matured, reflecting both increasing member balances and a growing number of members becoming eligible to access their savings.”
The report found withdrawals by people 65 and over increased by 10.5% to $3.3 billion which accounted for almost half of all withdrawals during the year.
“The number of members making a full withdrawal continued to decline, falling by 2.9% to just over 30,000, suggesting more members are choosing to keep some or all of their savings invested in a KiwiSaver scheme after reaching age 65,” the report said.
“First-home withdrawals also reached record levels, with more than 50,000 members withdrawing a combined $2.2 billion to support home purchases.
“Financial hardship withdrawals increased to $531.5 million, across 51,609 withdrawals, although the rate of increase was lower than observed in the previous two years.”
In terms of people accessing their retirement savings, Jensert said not everyone was withdrawing the entire amount and this could be a longer-term financial decision some people are making for their long-term financial wellbeing.
Contributions
The report found total funds under management reached a record $138.8 billion - this was supported by $13.2 billion in contributions and $10.7 billion in investment returns.
Of the $13.2 billion in contributions, $1 billion were from Crown contributions, $3.5 billion were employer contributions and member contributions made up $8.7 billion.
Despite increasing withdrawals, Jensert, in the report, said KiwiSaver remained firmly in the accumulation phase, with contributions exceeding withdrawals by $6.4 billion for the year, “supporting continued growth in KiwiSaver assets.”
“Net inflows or net contributions are still higher than the outflows that we’re seeing in the system which means that the KiwiSaver system continues to grow.”
Growth funds becoming more popular as switching increases
The report found that growth funds represented the largest share of KiwiSaver assets at 49% ($68 billion), followed by balanced funds (including default funds) at 27% ($37.4 billion) and conservative funds at 15% ($21.2 billion).
“This compares with 47.5%, 28% and 16% respectively a year earlier, indicating a continued shift towards growth-oriented investments," the report said.
Jensert told interest.co.nz with many members choosing to be in growth funds, this suggested that many people were comfortable taking more investment risk for potentially higher long-term returns.
“The key thing to note here is that the right fund really depends on the individual, and a growth fund may be suitable for someone with a particular investment horizon that is within their own risk tolerance, but it may not be appropriate for everyone.
"So there is just that case of making sure that it's right for the financial circumstances for that individual.”
Fund switching - when KiwiSaver members move between funds offered by the same provider - also continued to increase with 460,000 fund switches involving $11.9 billion of assets taking place in the year to March.
“Switching patterns varied across fund types. Growth funds continued to attract the largest number of incoming switches, reflecting their position as the most popular KiwiSaver investment option," The report said.
“However, cash and conservative funds recorded the largest net inflows by value, while balanced and growth funds experienced net outflows.”
Approximately 243,000 members made at least one switch during the year. While most members switched funds only once, around 44,000 people switched funds two or more times and more than 10,000 members switched three or more times.
This indicated that some members were actively reviewing and adjusting their KiwiSaver investments, the report said.
The report found the KiwiSaver membership reached 3.44 million in the year to March - a jump of 1.6% from 3.39 million the previous year.
“Default members who have not made an active fund choice constitute 10% of the total KiwiSaver membership.”
The report found the number of non-contributing KiwiSaver members increased by 3.3% to 1.42 million - which represents about 41.3% of total membership.
“Non-contributing members will include many of the over 374,000 members aged under 18 or over 65, as well as members who are temporarily outside paid employment.”
Concern about advertising focus on past performance
The FMA said there's increased competition in the KiwiSaver market, reflected in more switching between providers and increased advertising and promotional activity.
"Competition can benefit consumers when it drives innovation, improved services and better outcomes. However, providers should ensure that marketing and promotional activity supports informed decision-making."
"We continue to be concerned where past investment performance is a central feature of KiwiSaver advertising, particularly if it risks creating unrealistic expectations about future returns. While past performance can be a useful source of information for investors, it should be presented in a balanced manner and in a way that supports members to make informed long-term investment decisions," the FMA said.
Scams and fraud
Jensert said the FMA had seen "evidence of fraudulent KiwiSaver withdrawals, “indicating that as the average KiwiSaver balance grows the risks of scams and fraud grows as well.”
Asked more about the types of fraud and scams the FMA was seeing, Jensert told interest.co.nz this included things like unauthorised and fraudulent withdrawal activity.
“We can see misuse of personal information, which also emphasises the importance of making sure that personal information remains secure, particularly for members. We see social engineering and also attempts to exploit account access or withdrawal processes," she said.
“So you can sort of see two different strands of fraud really occurring. One being perhaps where there's been misleading advice or there's this fraudulent documentation potentially being supplied, but the other one being more on the technological side, where there might be interception fraud.”
For example, phones or emails could be getting intercepted.
“We encourage members to make sure that their personal information remains secure and we also encourage providers to make sure that their controls and frameworks are appropriate for the risk that is being run.”
People making more ‘active decisions’
“This year’s report suggests more members are making active decisions about their investments, including by investing in growth funds, making provider transfers and remaining invested after age 65.”
And as KiwiSaver grows in scale and complexity, the expectations on providers also increase, Jensert said.
“Strong governance, fair conduct and clear disclosure are essential to ensuring that members understand what they are invested in and can make informed long-term decisions," she said.
“Over the coming year, the FMA will also continue its focus on areas such as operational resilience, complaints, fraud, and fees because these all affect the outcomes members ultimately receive.”
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