When you join KiwiSaver, you are automatically assigned a default provider if you don’t select a fund. But you don’t need to stick with this same provider. You can change your provider at any time. The best thing to do is spend some time choosing the KiwiSaver scheme that is right for you- which in the long run, you will mean that you are better off- both financially and with your peace of mind.
Generally, many people look at fees and past returns when looking for a new KiwiSaver provider. Looking a reducing the fee you pay on KiwiSaver is a good start. Looking at past returns can indicate what to expect, but past returns do not predict future returns. A third aspect of KiwiSaver to look into, and which is often overlooked, is asset allocation. It would be best if you were comfortable with what you are investing in.
So with that, how do you change your KiwiSaver Provider?
How Do You Change Your KiwiSaver Provider?
You can change your KiwiSaver Provider at any time. To switch providers you must;
1. Find another KiwiSaver Provider that is right for you
Finding a provider that is right for you can seem like a lot of work. There are around 30 different KiwiSaver schemes to choose from. Each scheme offers slightly different funds when considering performance, risk level and fees, and any specific features that can be important to you, such as ethical and social investment options. Some schemes are straight forward and easy, while others can be customised to your risk tolerance and will be more involved.
A good place to start is the KiwiSaver Fund Finder on Sorted. Or you could read some reviews I have done on different KiwiSaver providers such as InvestNow, Koura, and a comparison between Superlife, Simplicity, and Juno.
2. Apply directly with the KiwiSaver Provider that you want to switch to
When you have decided on the KiwiSaver scheme you want to switch to, you apply directly to the new provider. Your new provider arranges the transfer of your savings from your old scheme to the new one. After the transfer is complete, they will notify you. The time it takes to switch schemes can vary, usually around 2 weeks, but by law, your old provider will have to switch you to your new provider within 35 days.
Remember, your old KiwiSaver provider may charge you a transfer fee- usually around $30- you will need to check this with them.
That’s it- only two steps and you have changed KiwiSaver providers.
Should you change your KiwiSaver Provider at all?
It’s common to think that once you have joined KiwiSaver and contribute, everything for your retirement is sorted. That is not correct. If you are still in a default fund, you should consider whether you should stick with them. Default KiwiSaver schemes may not always be right for you.
The further you are from retirement, the more time you have to invest. If you have more time on your side, the more sensible it is to select a higher-risk- high growth fund. If you need your money sooner, you’re better to choose a low-risk, lower growth fund.
Over time- you might also want to consider changing your asset allocation. Once you are nearing retirement, you might want to move your KiwiSaver fund to a more conservative scheme. When you need the money, being in a higher growth fund is not necessarily a good idea considering that the market could crash, which would take your retirement savings with it.
When Should You Change Your KiwiSaver Provider
The decision to switch your KiwiSaver scheme shouldn’t be taken lightly. Take time to decide, do as much research as you can, and don’t feel pressure to decide until you are totally satisfied with which provider you have chosen.
Remember- if you did not get all the information you require from a provider- contact them! And if they are not willing to provide you with something you want to know- then maybe reconsider switching your KiwiSaver to them. So then, when is it not a good time to switch my KiwiSaver?
When is it a good time to switch my KiwiSaver?
It may be a good time to switch your KiwiSaver Schemes if;
- Your current scheme charges high fees, and you can find a similar fund that has cheaper fees elsewhere.
- If you’re unhappy with the service and advice that your current KiwiSaver scheme is providing you.
- If you are unhappy with your KiwiSaver fund’s recent returns, but remember, you should not choose a new KiwiSaver scheme based solely on their past performance.
When is it not a good time to switch my KiwiSaver?
It may not be a good time to switch your KiwiSaver Schemes if;
- The share market has crashed, and you want to change to a less risker fund because of it. In this case, you have been in the wrong fund all along, but by switching when the market has crashed, you lock in your losses. It’s generally good to wait until the market has bounced back and then switch to a less aggressive fund.
- You have been given a tip or recommendation about a KiwiSaver fund that has been performing really well. It would be best if you did not switch your KiwiSaver to chase past returns, as past returns have no bearing on future returns.
- You are being pressured to do so. Step back and examine why they are pressuring you to switch- do they have any incentives?
How Long Does It Take To Change Providers?
The KiwiSaver Act sets out the longest time allower. It should, at most, take 35 days from when your old scheme receives notice of your intention to leave. When I personally switched KiwiSaver- it took 16 days to transfer my KiwiSaver scheme.
The provider of the old scheme must, within 35 days of receiving notice of the transfer (or any longer period agreed between the providers of the old and new schemes):Kiwisaver Act 2006
Who is the best KiwiSaver provider to Change to?
That is hard to answer. It will depend on who you are as an investor, your risk tolerance, and your outlook for the future. Check out the KiwiSaver Fund Finder on Sorted to compare all the KiwiSaver Schemes out there. You can also check out some of my previous posts on specific KiwiSaver Schemes.
- InvestNow’s Flexible KiwiSaver Scheme Review
- Kōura Wealth KiwiSaver Review
- Juno Vs. Simplicity Vs. Superlife Kiwisaver Funds
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