If you’ve been thinking that maybe you should switch your KiwiSaver provider but find yourself asking:
- Will it be a big hassle?
- Will it cost money?
- What do I even do?
Here’s what actually happens when you switch providers:
Why switch providers?
First up, we need to address why you want to switch. You can change KiwiSaver providers whenever you want. However, KiwiSaver is a long-term investment, so there’s no use chasing short-term gains by switching often. So, what are some good reasons to switch funds?
- You have never chosen a fund so are still in a default fund
There’s nothing wrong with default funds, but it pays to check if it is the best option for you. They are meant to be temporary parking spots for your fund while you shop around.
- Your circumstances have changed
If your income changes significantly or you have set new financial goals for yourself, it’s a good time to check in and see if your current KiwiSaver fund is still the right one for you. For instance, if you decide to buy a first home, you definitely want to make sure you’re in an optimal fund to contribute to your first home deposit.
- Your fund is invested in things you disagree with
Over the past couple of years, some KiwiSaver providers have been outed for investing in things like military weapons, animal testing, GMOs, and big tobacco. Some members have recently grown concerned that their KiwiSaver fund might be investing in Russian assets. If your fund supports things that don’t sit right with you, it’s time to switch funds and make sure your dollars do some good.
- You are dissatisfied with your fund’s performance, service, or fees
KiwiSaver funds are investments, so the value will fluctuate somewhat. However, if your fund is underperforming over some time, you may want to look at switching to a better-performing fund. Also, all funds vary in fees and the services provided for those fees, so if your provider isn’t giving you what you need, take a look at switching to one that does.
OK, so now you’re pretty sure you should switch providers.
There’s no need to plan an awkward break-up talk with your current provider. In fact, changing KiwiSaver providers can be done online without any ‘it’s not you, it’s me’ excuses.
How do I switch my KiwiSaver provider?
The first step is choosing a new KiwiSaver scheme. BetterSaver makes this part easier than anyone else. We’ll help you select a KiwiSaver fund that suits your personal situation, your tolerance for risk and your values and ethics when it comes to investing. All you have to do is take our five-minute Fund Finder Quiz and let our algorithm match you to the best KiwiSaver fund for you. It couldn’t be easier - we do all the hard work for you. We’re like expert matchmakers when it comes to KiwiSaver.
Then what happens?
Some technical stuff happens behind the scenes when you initiate a switch in KiwiSaver funds. Here’s how it works.
First, your application must be accepted by the provider of the new scheme you wish to join. They will establish your account and contact your previous provider to request a transfer of your funds to your new KiwiSaver account.
Your previous provider then goes through a cashing up process of your KiwiSaver investment. This can mean selling investment assets or cancelling units in the fund you hold. The old provider then pays the equivalent cash into their bank account and transfers the cash to your new KiwiSaver provider. Once the transfer goes through, your old account is closed. Your old provider has a legal obligation to keep records relating to your account, should you ever need them.
Your previous provider may or may not charge a fee for withdrawal. Check their disclosure statement on their website.
You will receive a notification of closure from your previous provider and generally a notification from your new provider when they have received the cash from your previous fund.
So really, most of the switching process is done without you having to lift a finger.
How long does it take?
A couple of weeks. Like most breakups, there are always a few extra things to take care of after the deed is done. Your previous provider must account for all fees, taxes, interest and investment returns due to you, so some minor amounts may continue to be transferred to your new provider after the initial transfer.
Also, if you are an employee and have KiwiSaver contributions deducted from your pay, there could be a contribution passing through IRD during the transfer (all payroll contributions first go to IRD, then to your KiwiSaver account). If this is in transit to your previous provider, they will have to return it to IRD, who will then reissue it to your new provider, which can cause a minor delay.
During this time, your money may be out of the market - so you won’t be seeing any gains or losses - but this is usually just the time needed for the cash to be transferred and applied to your new KiwiSaver fund. No need to worry; your money is perfectly safe during this time (unlike the sweatshirt you left behind at your ex’s).
Let BetterSaver handle your KiwiSaver switch
We are your go-to KiwiSaver experts, ready to assess your situation and help you to get into the best fund for you. We’ll handle all the details of switching your KiwiSaver account so you don’t have to worry about anything.
And when things change for you - like you score a better-paying job, or you meet ‘the one’ and decide it’s time to settle down in a home - we’ll be here to see if your KiwiSaver fund is still your best match or if it’s time to cut ties and move on again.
What are you waiting for? Take the quiz and find out which KiwiSaver provider is the one for you.