Explainer: The key December 1 KiwiSaver changes you need to know about

A major revamp of KiwiSaver will kick into gear in just over a week.

Earlier this year, the Government took action to ensure KiwiSaver users were getting a "better bang for their buck" - automatically upgrading default funds to risker profiles.

From next Wednesday, December 1, default users will be put into balanced funds - providing medium to high returns with medium to high risk.

The lineup of the default KiwiSaver providers are also changing, explains Murray Harris from investment firm Milford Asset Management.

"There are over 30 KiwiSaver providers out there but nine of them have been appointed by the Government as default providers - so that's the provider you end up with if you haven't made a choice yourself," he told The AM Show.

"Every seven years, the Government reviews the lineup of those providers and that was completed earlier this year and that review's based on a number of criteria including investment performance, services and fees.

"This time around, for the first time, five of those default providers have actually lost their 'default' status so they're going to be removed. Four remain and two new ones have been added."

The default providers from December 1 will be BNZ, Booster, BT Funds Management, Kiwi Wealth, Simplicity and Smartshares. AMP, ANZ, ASB, Fisher Funds and Mercer will no longer have default fund licences. 

Harris said the changes were aimed at encouraging people to make an active choice about their KiwiSaver.

"We would encourage people to really check their KiwiSaver provider, check their fund [and] make sure they're on track.

"If you're not happy, you can move. Otherwise, you're going to be forcibly moved next week."

What does it all mean?

People with one of the KiwiSaver providers given the boot will automatically be transferred to a new provider by Inland Revenue from next Wednesday. Accounts will change to investment or 'balanced' funds from default conservative funds. 

"The default funds have actually been less risky," said Harris. "For the past 14 years since KiwiSaver started in '07, those funds have been invested mostly in cash and bonds… so investors in default ones have actually missed out on great returns in sharemarkets.

"You can't predict where markets are going to go but if you look back over the last 10 years, a balanced fund has generated, every year… 3 percent better than a conservative fund."

KiwiSaver users will also be paying way fewer fees from next week. On top of that, default providers won't charge fixed annual or monthly fees.

Users who have already actively chosen their KiwiSaver fund won't be impacted.

"You need to make these choices - you need to engage," Harris said.