KiwiSaver has helped millions of New Zealanders save for their future – but it’s also surrounded by myths and misunderstandings that can stop people from making the most of it.
From fears about government control to confusion over when you can access your savings, misinformation is surprisingly common. Here, we debunk 10 of the biggest KiwiSaver misconceptions and set the record straight.
Myth 1: “The Government controls my money.”
Your KiwiSaver savings are yours – held securely in trust by an independent supervisor, not by the Government or your provider.
The IRD ensures your contribution from your wages and salary gets deducted, as well as your employer’s contribution.
The Government only sets the rules; it can’t access or use your funds.
Myth 2: “KiwiSaver is a scam and could go bust.”
KiwiSaver funds are tightly regulated under the Financial Markets Conduct Act 2013.
Every KiwiSaver scheme must have:
• A licensed supervisor to oversee the fund manager and ensure everything is done properly and legally.
• A custodian to hold and protect the scheme’s assets on behalf of members.
In the highly unlikely event that a KiwiSaver provider had financial issues, the supervisor would take control of the scheme’s operations. They would work with the custodian (who holds the assets) to make sure members’ money stays safe. The supervisor would find a new licensed manager to take over running the scheme.
You may have seen headlines about Super schemes being misused in Australia – but you do not need to worry in New Zealand, as KiwiSaver is set up to strongly protect its members’ money.
Myth 3: “All KiwiSaver providers are the same.”
Providers differ in fees, investment strategy, performance, and responsible-investing options. Over time, these differences can mean thousands of dollars more (or less) at retirement.
At Generate, we pride ourselves on putting performance first and we have the long-term track record to back this up.
We also pride ourselves on our commitment to excellent customer service, and have won a host of awards to prove it.
Read more here about what makes Generate a great choice to be your KiwiSaver provider.
Myth 4: “I don’t have any control over my investment.”
You decide your fund type, provider, and contribution rate – and you can change any of them at any time. Generate offers nine different KiwiSaver funds and tools to help you tailor your plan. Click here to see which fund is right for you.
You can also change your fund choice (or fund mix). While it’s not advisable to chop and change often, it’s a good idea to review your fund when your situation changes.
For example, if you are saving for a First Home Withdrawal, which is most commonly a shorter-term goal, you might choose a more conservative fund.
Once you have made the withdrawal and are saving for retirement, a growth fund is likely a better choice if your retirement is still several years away. Read more about this principle here.
Additionally, if you feel your current provider is not performing or doesn’t have good customer service, you can switch to another provider at any time.
Myth 5: “I’ve left it too late – what’s the point?”
It’s never too late to start. Even later joiners benefit from employer and Government contributions, and compounding returns can still make a meaningful difference.
If you’re earning wages or salary and aren’t getting the benefit of your employer contributions, you’re leaving money on the table.
The same goes for the Government contribution. While the maximum you can get is now only $260.72 a year, this still all adds up. Read more here about why it’s still worth it.
Myth 6: “My money is locked away until I’m 65.”
While the main purpose of KiwiSaver is to help Kiwis be better off in retirement, you can also access your funds early for a First Home Withdrawal. This is an important milestone that can help you become better off financially.
You can also withdraw your money in specified circumstances, such serious financial hardship or a serious illness, or if you permanently move overseas (except to Australia).
Myth 7: “The Government could change the rules and take it away.”
Changes to KiwiSaver policy go through Parliament and public consultation. There is strong support for KiwiSaver on all sides of the political spectrum, so sweeping changes are very unlikely.
It’s possible that the government may make some changes, such as to the age of eligibility for the Government contribution (this recently dropped from 18 to 16) and to minimum contribution rates (this is moving gradually up from 3% from 1 April 2026).
However, no matter what changes are made, your funds are legally yours and can’t be taken or used by the Government.
Myth 8: “The provider decides my tax rate.”
Your Prescribed Investor Rate (PIR) is based on your income, and you choose it. Keeping it up-to-date ensures you pay the right amount of tax on your returns.
If you do not choose a PIR, you will pay the highest rate (28%) by default, so it’s definitely worth making sure yours is correct.
What’s your PIR? Find out here.
Myth 9: “Switching funds when markets fall will protect my money.”
Moving funds during downturns can lock in losses. When markets fall, our knee-jerk reaction is often a desire to move our money. But staying steady and staying the course – remaining focused on long-term growth - has historically delivered better results.
What’s more, periods of volatility often also include some of the market’s best days, so switching funds may mean you miss out on these potential gains.
Here’s some more information on staying the course and why it’s important.
Myth 10: “It’s too complicated to understand.”
KiwiSaver is simpler than it seems – the bottom line is that it’s a long-term investment account designed to help you build wealth for your retirement
If you have questions about KiwiSaver, a great way to demystify it is to have a quick, no-obligation chat with a KiwiSaver expert.
Getting face-to-face advice (or even advice over Zoom) makes everything clear and easy to manage. Our friendly Generate advisers are based all over the country and break it down simply for you.
The common refrain from Kiwis who book an advice session with Generate? “I wish I’d done this sooner!” Check out Generate’s Google reviews to see what we mean.
Mythbusting wrap-up
KiwiSaver remains one of the most effective ways to grow long-term wealth, but only if you understand how it really works. If you’ve believed any of these myths, it might be time for a quick check-in or conversation with an adviser. Small changes today can make a big difference to your future.