How New Zealand investors will be impacted by changes coming to KiwiSaver and Bonus Bonds

  • 08/11/2021
  • Sponsored by - Milford
How New Zealand investors will be impacted by changes coming to KiwiSaver and Bonus Bonds
Photo credit: Getty Images

Two important events are happening for New Zealand investors as we head toward the end of the year. There is a changing of the guard with KiwiSaver default providers, and Bonus Bonds is winding up after launching over 50 years ago. Newshub hears from award-winning KiwiSaver provider Milford on what these changes could mean for investors.  

Will the KiwiSaver default fund changes impact me?

When you sign up for a KiwiSaver account and you do not actively select your KiwiSaver provider, you will be automatically allocated to one of the KiwiSaver default providers appointed by the Government. Starting on 1 December, some KiwiSaver default providers are losing their default status, while some have retained their status and yet other new providers have gained default status.

Around 263,000 people could be automatically moved to a different Default KiwiSaver scheme. If you are still with your default fund and your KiwiSaver provider has lost its default status, you will be automatically moved to one of the new default providers.

Another big change is that if you are in a default fund, regardless of who the provider is, the type of fund your money is invested in will change from a conservative fund to a balanced fund.

Responding to what the changes mean for investors, Milford's Head of KiwiSaver, Murray Harris says "with all the changes happening right now, this is the perfect time to make sure you're in the right fund and you’re with the right provider".

Harris says KiwiSaver can often be seen as a set and forget style of investment, but it's important to research providers and to seek advice to ensure you’re in the right fund for you.

"Making an active choice now can significantly affect your KiwiSaver balance when it comes time to retire."

If you are still with your default fund, Harris says it pays to do a little research. "Make sure you know who your current provider is, what fund you are in, what returns they have delivered, and what other value they have added. Do they give you regular updates or visibility on where your money is invested? Do they offer financial advice? Is there someone to talk to if you have questions? You are paying them fees, so you want to make sure they’re working hard for you."

Bonus Bonds is ending

One other big change happening in the financial world in December, is the end of the long-running savings programme known as Bonus Bonds that launched over 50 years ago. 

Over one million Kiwis had money in Bonus Bonds, with around $3.3 billion held in the scheme when the decision was made to wind it up. Many investors may be left wondering what to do now.

Harris says you have a number of options. "If you are comfortable with taking on more risk in the pursuit of higher returns, then it could be worth considering investing your money in a professionally managed investment fund."

He says the first thing to think about is what do you want to use the money for? "Do you need it in the short term? Could you invest it for the long term? There are different types of investment funds to suit different goals, timeframes and appetites for risk."

But investment funds are not the only way to invest. Amongst other options, Harris says you could consider adding the money to your KiwiSaver account. Just bear in mind that KiwiSaver is designed for retirement savings, and you generally can only withdraw the money for a first home purchase or when you reach the age of 65.

Whether or not the KiwiSaver or Bonus Bonds changes relate to your personal situation, it's a good reminder that it's worth doing your research and deciding what type of investment is right for you.

Milford can help with both decisions with their award-winning Milford KiwiSaver Plan and Milford Investment Funds. They also offer digital financial advice to help you decide which Milford Fund is right for you.

This article is intended to provide you with general information only. It does not take into account your objectives, financial situation or needs. Please read the relevant Milford Product Disclosure Statement as issued by Milford Funds Limited at Before investing you may wish to seek financial advice. The disclosure statements for all Milford financial advisers contain more information and are available for free on request. For more information about our financial advice services visit Past performance is not a reliable indicator of future performance.

This article was created for Milford.