Should you set up a KiwiSaver account for your child?

Should I set up a KiwiSaver account for my child?

Setting up a KiwiSaver account for your child can support long-term savings, particularly for a first home. Starting early allows investments to benefit from compounding returns, but funds are locked in and some benefits only apply from age 16. It’s important to weigh up flexibility, fees and contribution plans before deciding.

Why parents consider KiwiSaver for their children

When it comes to setting up your kids for a strong financial future, the earlier you can get started, the better.

While many parents and guardians are well aware of savings accounts and the habit of popping a bit of money away for their child each year, we often get asked whether it’s a good idea to set up a KiwiSaver account for children too.

A KiwiSaver account is not just a savings account; it’s an investment which if nurtured well, can grow into a very helpful chunk of money by the time the child is ready to buy their first home.

However, KiwiSaver has strict rules – particularly around withdrawals, so it’s important to understand both the benefits and limitations on how KiwiSaver works for children before deciding if it’s right for your family.

The benefits of starting KiwiSaver early

1. Helping towards a first home

⁠New Zealand's housing market doesn't come cheap, and let's face it – many parents might still be chipping away at their own mortgage when their kid is ready to jump into the housing game. It can be a bit overwhelming!

That’s where a KiwiSaver account can help. Setting your child up with a KiwiSaver account early and investing a bit of cash into their account each year could help their balance reach a healthy bump by the time they are ready to buy their first home.

2. The power of compounding over time

The magic of compound returns is a key feature of having a KiwiSaver account. Starting early allows contributions to benefit from a long time in the market, and their funds and any returns to compound each year.

"Time in the market" refers to the concept that the longer an investor stays invested in the financial markets, the greater the potential benefits over time. Longer investment periods allow for compounding returns. Over time, earnings on an investment generate additional returns, and these returns, in turn, generate more returns. Compounding can significantly boost the overall growth of an investment.

3. Building financial awareness early

Introducing children to the concept of KiwiSaver can provide valuable financial education and instil good savings habits. As your child gets older, they can learn about important investing concepts and risk and reward to help set them up for success.

4. A shared family contribution

Having a KiwiSaver account is not just an individual endeavour; it's an opportunity for family collaboration. You, grandparents, and/or other family members can contribute to your child's KiwiSaver account, creating a collective effort that accelerates their savings journey and emphasises the importance of financial support within the family.

5. Supporting long-term financial habits

Having a KiwiSaver account can be an early step towards financial independence. It teaches children about the importance of planning for their future and taking control of their financial well-being.

Things to consider before setting up KiwiSaver account for your child

1. Limited access to funds

The KiwiSaver scheme was designed by the New Zealand Government and has strict rules – particularly around withdrawals. Your child’s KiwiSaver savings can only be withdrawn either when they are ready to buy their first home – or when they reach retirement. (There are some very specific exceptions - see more here.)

Both of these are likely a LONG time away for your child, and while this means the funds get the benefit of having a long time in market to grow – it’s important to remember that they are locked away and can’t be withdrawn at any time.

2. Fees & contributions

To help encourage good savings habits early, Generate members under 18 don’t pay a monthly administration fee, so more of your contributions stay invested and working for them.

You can open a KiwiSaver account for your child with no minimum investment, making it easy to get started early. However, it’s generally best not to leave the account stagnating, as management fees are charged as a percentage of the investment. The fees vary by fund type - see Generate KiwiSaver Scheme fees here.

Even small, regular contributions – for example, $100 a year – can build momentum over time and help take advantage of compounding returns, giving their savings the best chance to grow.

You can make lump-sum transfers whenever you like or set up an automated direct debit to keep things consistent.

3. Age-based eligibility for benefits

While KiwiSaver has some great benefits that no other investment offers. Unfortunately, these are not available for all ages.

From 1 July 2025, to be eligible for the annual Government contribution you must be aged between 16 and 65 years.

Before 1 April 2026, to be eligible for employer contributions, you must be aged between 18 and 65. (However, some employers choose to anyway – it’s worth asking the employer).

After 1 April 2026, to be eligible for employer contributions, the starting age drops to 16.

So, is KiwiSaver right for your child?

If you are focused on long-term savings for your child’s future, especially for their first home, a KiwiSaver account could be a very beneficial investment, so long as you are happy to continue contributing a small amount each year until your child is ready to take over the account themselves.

However, we recommend talking to a KiwiSaver or financial adviser first to discuss your specific situation, goals, and the best approach for your child's financial future.