Do you know how much you’re paying in KiwiSaver fees? When you’re investing to earn solid returns and save for retirement, every dollar counts. Here are some key things to consider if you want to minimise your KiwiSaver fees and get the best returns possible.
Why fees are so important
All KiwiSaver providers will charge you fees for investment, management and administration costs. The amount can also vary greatly across different providers and fund types, as the latest Canstar’s KiwiSaver ratings show.
To give you a practical example, when analysing balanced funds, Canstar found a difference of $123 between the most and the least expensive fees. It might not seem a lot in the short-term, but different fees can have an impact on your long-term returns, your saving strategy and – most importantly – your goals.
Types of fees & disclosure rules
Usually, the annual cost of a KiwiSaver fund is a combination of separate fees, which depending on your provider can be dollar-based, percentage-based or a combination of both. These include:
- Annual member fee
- Management fee
- Administration ee
- Trustee fee
- Expense fee.
So, how can you know for sure what fees are involved and how much you’re paying for them? All funds are required to fully disclose this information in their periodic disclosure statement, which can be found on your KiwiSaver scheme website. And of course, if you need help understanding the ins and outs of your fund, we’re here to help.
—Tips and tools for comparing fees
When it comes to planning and working towards your retirement goals, ensuring that you’re getting the right value for your money (and earning a healthy compound interest) is crucial. That’s why taking the time to choose, review and compare KiwiSaver funds makes sense.
Obviously, a fund cannot be judged on fees alone, as the highest-fee fund can also be the one achieving the highest returns. But as you can imagine, that is not always the case. If you’d like to have a thorough understanding of what’s available out there, and how it relates to your needs, always feel free to contact us. In the meantime, these online tools are a good starting point.
KiwiSaver Fees Calculators
Sorted’s online calculator allows you to work out what fees you’re likely to be charged and compare similar fund types, based on a few basic factors such as your age, annual income and contribution rate.
KiwiSaver provider Simplicity also has its own online tool, which is designed to compare all providers’ annual KiwiSaver fees.
Canstar’s KiwiSaver ratings
This tool provides a summary of how 19 KiwiSaver schemes are performing as well as their features and fees.
Financial Markets Authority’s KiwiSaver Tracker
In November 2017, the FMA has introduced their KiwiSaver Tracker, giving investors a clearer picture of what managed investment funds are really offering in terms of fees and returns.
An Adviser Disclosure Statement is available free and upon request.