Bank or specialist KiwiSaver provider - which is safer?

There are roughly 25 KiwiSaver providers available to the public. 5 are banks, and the rest are what we call specialist providers.

Banks: Are generalists, they do a lot of stuff. Bank Accounts, Mortgages, Term Deposits, KiwiSaver etc.

 

Specialists: Focus on KiwiSaver.

 

The main differences between the two:

  1. The specialist providers only handle KiwiSaver investments, so they have more time to focus on getting the best returns. They have to perform well, because it’s all they do.

  2. The majority of the banks offering KiwiSaver are Australian owned, with Kiwi Bank the only NZ-owned bank provider.

 

Most people want the higher returns that specialist providers can offer, but they wonder whether their money is safer if invested with one of the bank-run KiwiSaver schemes.

 

This question is totally understandable. However, once you look under the hood, it’s clear that our KiwiSaver money is just as safe with a specialist KiwiSaver provider.

Here’s Why:

  1. Regardless of who your KiwiSaver provider is, they can’t access your money directly in any way. No cheeky withdrawals, nothing.

  2. Every major decision your KiwiSaver provider makes (such what fees to charge, investment decisions etc.) all have to be approved by what’s called a “Supervising Trust.” These trusts are all regulated by New Zealand’s Financial Markets Authority - Meaning your money is in good hands.

  3. There are only 3 of these Supervising Trusts being used by the majority of providers. And the banks are using the same ones as the specialist KiwiSaver providers. Check the table below:

KiwiSaver Trusts – Who uses who?

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When it comes to KiwiSaver; your level of risk depends on the type of fund your money is invested in (e.g. conservative, balanced, growth) - and not who your provider is.

 

If you’d like to know more about what these specialist providers can offer, the best step is to chat to one of our financial advisers. They work with a number of the best specialist providers, and can help you select a provider, and fund, that’s right for your unique situation. The best part is, their help is free of charge.