KiwiSaver Myths, Busting the Big Misconceptions

The markets have been a bit shaky at the moment. And now everyone is talking about what’s happening with their KiwiSaver. Your KiwiSaver might have recently seen a decrease in value if you have some proportion of in investing in the stock market.

Whenever I talk to people about KiwiSaver, talking to friends and family, colleagues, and even strangers waiting in lines at the bank, (Yes that did happen once) there always seems to be several president myths about it and how it works.

I have already covered kiwisaver with my thought on what is wrong with KiwiSaver here, so check them out too!

So, let’s get into some more KiwiSaver myths…

1. The Government can take my Money!

This is a common myth people have- that the government can take your KiwiSaver money and use it for their own benefit. 

Would the government use your KiwiSaver if Steven Joyce’s 11 billion dollar deficit exists?


The government can not touch your KiwiSaver money. It’s your money, held by a fund provider- that you choose. The fund provider can’t touch your money either. If a provider, such as ANZ  helps itself to your money if they will get into serious financial trouble.

2. The Government can use my Money to Fund Projects.

Many of these myths come from the credit crisis of 2008 where several governments around the world dip into the pension fund to get their country through the recession.

The good thing with KiwiSaver is that it all in your name- the money is yours!

It cannot be used to pay your pension, or pay for infrastructure projects. The only role the government has had in KiwiSaver is in setting up the framework of KiwiSaver, they do not run it.

3. If I die- the Government Takes my Money.

No! This is not the case. Again, it’s your money, like everything else you own, your house etc,  it becomes a part of your personal estate. 

This means that if you are in KiwiSaver you will want to set up a Will. Check out Sorted for a guide on how to Set up a will. Once you have a Will set up you can choose where your KiwiSaver money will go when you pass.

4. KiwiSaver is Government Guaranteed

KiwiSaver is not guaranteed by the government. As before, the government can’t touch your money, nor do they offer any sort of guarantee on the money you have in Kiwisaver.

It is easy to understand where this myth comes from as when you deposit money into your KiwiSaver it is sent to the government.

KiwiSaver contributions are sent to the Inland Revenue Department. The money is then briefly held by IRD, before being passed onto your fund provider. This is why it can take up to 3 months for your contributions to appear in your choose Kiwisaver Scheme.

5. If the Company That Manages my Kiwisaver Goes Bust- my Money is Gone.

Again, no- the company only manages the assets that you invest in. It is your money, not the manager’s money, invested in different financial instruments.

KiwiSaver funds are trusts which are set up in your name. If a KiwiSaver provider were to go bust, your money won’t be instantly lost. It will be held in the trust – this means it’s “safe” so it cannot be accessed by the provider for any other use.

6. If I get divorced- I can Lose my KiwiSaver

Even though you’re KiwiSaver is in your personal name- it can be drawn into divorce proceedings and shared as the couples separate.

So this is not really a myth, more of a consideration.

Another tip related to your partner- If you work and your partner doesn’t, consider paying into their KiwiSaver every year. Pay at least $1043 per year so that your partner receives the entire government “tax” credit of $521.50- consider it like free money. You wouldn’t pass up free money it if was lying on the street would you?

7. All Kiwisaver Funds are the Same

Definitely not the case.

Funds are organised into Growth, Balanced, Conservative, Aggressive, and Defensive. general types depending on your risk tolerance and stage of life.  Once you have chosen which type of fund then you will need to consider the different fees offered, and different services offered. Check out the great fund finder from sorted!

8. It’s hard to Change Kiwisaver Funds

It’s not hard to change funds.  The sorted website makes it so easy. You just find the fund that is the best for you. Give the new fund provider your IRD number, and proof of identity. And then the new fund provided will do all the rest of the work for you. Super easy

9. Ok- so I am in KiwiSaver- I’m Sorted for Retirement

Just because you are in KiwiSaver does not mean that you are financially sorted. If you are in KiwiSaver and don’t know what fund you are in- you haven’t done enough work. The default fund is conservative and it is most likely not the fund you need to be in.

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