The number of people in KiwSaver has grown to 2.6 million, but the Commission for Financial Capability (CFFC) says there is still room for improvement.
The growth in figures is contained in the latest KiwiSaver annual report from Financial Markets Authority (FMA).
The FMA says in the last year total KiwiSaver membership grew by 4 percent to 2.6 million. That compares to an increase of 8 percent in the previous year.
The CFFC says a major reason for the slowdown in membership growth is the removal last year of the $1000 kickstart for new members. It says this has led to a "dramatic" reduction in the numbers of people under 18 who are joining the scheme.
It says there are also quite a few working-age people who have not joined the scheme.
The CFFC says a recent survey identified three major reasons for why some adults were reluctant to join - affordability, not trusting the Government and concern about losing all of their money.
The Commission's investor education group manager David Boyle says that suggests "there is more work to do to support the public in making informed decisions about whether to join".
The Commission is also concerned that almost 580,000 members do not appear to have made any contributions to their account in the year to June. That means they missed out on $521 of "free money".
The "free money" is the KiwiSaver Member Tax Credit. To get it you must be 18 or older and make contributions of $1042 between the start of July and June the following year.
Members can receive the credit year after year.
The Commission says there were also a similar number of people who did not contribute enough to receive all of the $521 tax credit.
Some of the people who did not make contributions would have been children who are not eligible for the tax credit, but many were adults.
The report shows there has been an increase in people choosing to switch from default funds into a more appropriate fund for their age and circumstances.
The number of people in a default scheme has fallen from 465,000 in 2013 to 445,000 now. That is 17 percent of total members.
The FMA says that some providers have expressed concern about the barriers they face when it comes to encouraging people to switch from a default to an active fund.
Some providers are concerned they might break the rules around selling products and offering advice to investors.
The FMA says it is going to issue updated guidance to providers so they can engage with their customers in a more meaningful way about the benefits and options available to them in KiwiSaver.
The FMA's report shows that for the first time the number of people transferring between schemes was higher than the number of people joining KiwiSaver.
Over the course of the year, 175,000 members transferred to a different scheme provider (compared to 177,000 in 2014-15), while 145,000 new members joined (compared to 245,000 new members in 2014-15.
FMA chief executive Rob Everett says "as new membership is slowing, it's logical that providers will continue to look to transfers to grow the size of their schemes".
The FMA says it will be watching closely to see how the transfers occur and to remind KiwiSaver scheme providers of its expectations.
It also wants to make sure that KiwiSaver investors are given information on how to switch funds and what they should expect from providers.
The CFFC's David Boyle says "while we think competition is great, our concern lies with what motivates a KiwiSaver member to switch".
He says that contribution rates and fund selection have two of the greatest impacts on investment returns.
"We would like to see providers adding value either by way of return, education support and improved services, or hopefully lower fees to help their members get the most out of their KiwiSaver fund," Mr Boyle said.