KiwiSaver Fees and Your Retirement: The Real Cost of 1.23% (NZ, 2026)

The average KiwiSaver growth-fund fee is 1.23% a year. Compounded over 30 years, a 1% fee gap can cost a saver tens of thousands of dollars. Here is the maths.

KiwiSaver fees feel small. A line item of 1.23% a year does not look frightening next to a balance that goes up most years. But fees are charged every year, on the whole balance, including the growth that fees in prior years could have earned. That is why KiwiSaver fees cost retirement savers far more than the headline percentage: they do not cost you a percentage of your savings, they cost you a percentage of your savings and everything that money would have become.

This guide shows you the real cost of the average New Zealand KiwiSaver fee, how a seemingly tiny gap compounds over a working life, and how to find out — in about ten minutes — exactly what your fund is charging you.

TL;DR

TL;DR: The average KiwiSaver growth-fund fee in New Zealand is 1.23% a year ¹, versus around 0.24% for the cheapest diversified providers ⁷. On a $100,000 balance growing over 30 years, that ~1% gap can compound into tens of thousands of dollars of lost retirement savings ¹⁵. Higher fees do not reliably buy better returns. You can check your fund's fee on Sorted Smart Investor.

What do KiwiSaver fees actually cost you each year?

Every KiwiSaver fund deducts an annual fund charge, usually expressed as a percentage of your balance. It is taken automatically, before the unit price you see is calculated, so most members never feel it leave their account. That invisibility is the whole problem.

Across the entire KiwiSaver system, providers deducted $868.5 million in fees in the year to 31 March 2025 — up 10% on the $789.6 million taken the year before ⁴⁵. (For context, that prior-year total was itself up about 19% on the $664.1 million charged in the year to March 2023 ⁵.) To be fair to the industry, fees as a proportion of funds under management have fallen over the long run, from around 1.0% in 2012 to about 0.7% of funds under management in 2025 ⁶. The total dollar figure keeps rising mostly because balances are growing, not because funds are getting greedier on average.

But averages hide a wide spread. The gap between a low-cost provider and an expensive one is where retirement savings leak away, and that gap is within your control.

A common misunderstanding is that KiwiSaver has no fee at all, or that the government runs it for free. Every fund charges an annual fee, even if you never see it leave your account.

How much is the average fee — and how do funds compare?

The headline number Kiwis keep hearing — 1.23% for a growth fund — comes from the market average that Simplicity cites against Sorted's data ¹. Balanced funds average 1.01% and conservative funds 0.90% ²³. (A narrower multisector sample puts the growth-category average closer to ~0.97%; the difference is just which funds are counted ¹⁷. We use the Sorted-based 1.23% as the headline.)

Here is how some real, named New Zealand funds compare on their annual fund charge:

The spread is enormous. The cheapest diversified options charge about a fifth of the growth-fund average. On the standard $30,000 balance that Sorted uses to compare fees in dollars, Simplicity's balanced fee of 0.25% works out at about $75 a year, versus roughly $303 at the balanced-fund average of 1.01% (0.0101 × $30,000) ²¹⁷ — and that is before the gap starts compounding.

How fees compound: the real drag over 30 years

Fees do their damage slowly, then all at once. The reason is compounding working against you. A 1% fee taken this year is not a one-off $1,000 on a $100,000 balance — it is $1,000 plus the 30 years of growth that $1,000 would have generated if it had stayed invested.

The hero illustration at the top of this article plots the compounded gap between a fund charging the 1.23% growth average and one charging 0.24% ⁷ — a 0.99 percentage-point difference — on the same gross return, applied to a $100,000 balance over 30 years.

The picture it paints: the two funds start identical. By year 10 the gap is modest. By year 20 it has widened sharply. By year 30 the lower-fee fund is tens of thousands of dollars ahead ¹⁵ — purely because of the fee difference, on identical underlying returns. (Basis: Sorted average fees ¹⁷; illustrative compounding, not a forecast.)

The shape matters. In the early years the lines are almost on top of each other, which is exactly why fees feel harmless when you are young. The damage is back-loaded. By the time it is obvious, you have lost the decades of compounding that would have done the heavy lifting.

Worked example: the 0.99% gap on a real saver

Scenario: Mere is 35, with a $100,000 KiwiSaver balance, in a growth fund. Assume both funds earn the same gross return; the only difference is the fee.

That $990 first-year difference ($100,000 × (1.23% − 0.24%)) looks trivial. But it repeats every year on a growing balance, and each dollar not charged stays invested and compounds. The Retirement Commission is blunt about the scale: over long periods, fee differences "can add up to tens of thousands, and even hundreds of thousands" of dollars ¹⁵.

A separate third-party calculator illustrates the upper end: a fund charging 1.5% costs roughly $107,000 more than one charging 0.3% over 30 years, on identical 7% gross returns with a $20,000 start and $5,000 a year added ¹⁷. Treat that as illustrative, not a promise — but the direction is not in dispute.

Why a 1% fee gap can mean tens of thousands at retirement

The intuition most people have is linear: "a 1% fee costs me about 1% of my retirement." It does not. Because the fee is charged on the whole balance every year, and because it strips out money that would otherwise have compounded, the lifetime cost of a 1% fee is far more than 1% of your final balance — frequently 20% to 30% of it over a full career.

This is also why the fund-level fee matters far more than the dollar membership fee. The FMA notes that default funds now average just $38 per member in fees, while active funds average $259 per member ¹⁴. A flat $30 membership fee is annoying; a 1% difference in the percentage charge is the part that actually reshapes your retirement.

If you want to see this on your own numbers rather than a worked example, our KiwiSaver fund comparison service models your balance, contributions and fee against lower-cost alternatives, side by side.

Do higher fees buy better performance? (short answer: usually not)

This is the question that actually decides whether a high fee is justified. If an expensive active fund reliably beat a cheap index fund after fees, the fee would be worth it. The New Zealand evidence does not support that as a rule.

Morningstar's long-run KiwiSaver category averages (10-year annualised returns, after fees, before tax) tell the real story:

The biggest driver of your return is the type of fund you are in — how much sits in growth assets like shares versus defensive assets like bonds and cash — not how much you pay. A high fee on a growth fund does not turn it into a better growth fund. Some active managers do outperform in some periods; the problem is you cannot reliably pick them in advance, and the fee is charged whether they win or lose. As a starting position, paying less for the same fund type is the surer bet.

How to find your fund's true fee (Sorted Smart Investor)

You do not have to take your provider's marketing at face value. The Retirement Commission's free Sorted Smart Investor tool lists every KiwiSaver fund, its fees, and — importantly — projects your total fees to retirement in dollars ¹⁵, not just a percentage.

To check your own fund:

1. Go to Sorted Smart Investor and search for your provider and fund by name.

2. Read the annual fund charges line — this is the percentage that does the compounding damage, not the flat membership fee.

3. Use the projection tool to see your estimated total fees in dollars between now and age 65.

4. Compare that figure against a lower-cost fund of the same type (growth against growth, balanced against balanced).

5. Note your PIR — your Prescribed Investor Rate (10.5%, 17.5% or 28%, depending on income) ¹³. The wrong PIR is a separate, common leak worth fixing at the same time.

If the numbers look off, that is exactly the kind of thing a KiwiSaver review exists to sort out — including whether switching is actually worth it for you, or whether you are giving up something (like a specific strategy) that justifies the cost.

Your fee-check checklist

• 01 — Find your fund's annual fund charge (the percentage), not just the membership fee.
• 02 — Identify your fund type (conservative, balanced, growth, high growth).
• 03 — Compare your fee against the average for that type: ~0.90% conservative, ~1.01% balanced, ~1.23% growth ¹²³.
• 04 — Use Sorted's dollar projection to see total fees to age 65, not a percentage.
• 05 — Check whether higher fees are buying anything — compare after-fee returns of the same fund type ¹⁶.
• 06 — Confirm your PIR is correct so you are not overpaying tax on top of fees ¹³.
• 07 — If the gap is more than ~0.5%, get an independent second opinion before switching.

You can run the first pass yourself with our free KiwiSaver health check.

A note on independent advice

Smiths Financial does not run its own KiwiSaver product. That means an assessment of whether your fee is too high, or whether switching would cost you more than it saves, is independent of any product we sell.

Frequently asked questions

What is a good KiwiSaver fee in NZ in 2026? For a diversified fund, anything around 0.24% to 0.50% is genuinely low-cost — providers like Simplicity (0.24%) and SuperLife sit at the bottom end ⁷¹⁷. The growth-fund market average is about 1.23% ¹, so paying meaningfully below that, for the same fund type, is the goal.

How much do KiwiSaver fees really cost over a lifetime? Far more than the headline percentage. Because the fee compounds against you every year, the Retirement Commission says fee differences over long periods can add up to tens — even hundreds — of thousands of dollars ¹⁵. A 1% gap commonly costs 20–30% of a final balance over a full career.

Do expensive KiwiSaver funds perform better? Not reliably. Morningstar's long-run KiwiSaver category averages are driven by fund type — 7.8% for growth, 6.4% balanced, 4.1% conservative over 10 years — not by how much you pay ¹⁶. Some active managers beat the index in some years, but you cannot pick them in advance and the fee is charged either way.

Where can I see my exact KiwiSaver fee? On the free Sorted Smart Investor tool, which lists every fund's annual charges and projects your total fees to retirement in dollars ¹⁵. Your annual statement and your provider's fund update also show it.

Is it worth switching KiwiSaver providers just to save on fees? Often, but not always. A fee gap above about 0.5% on the same fund type is usually worth acting on. Switching is free and you do not lose your balance or contribution history — but check you are not giving up a strategy you actually wanted. An independent KiwiSaver review can confirm it for your situation.

Did the 2025 Budget changes affect my fees? Not your fees directly, but they raised the stakes. From 1 July 2025 the government contribution halved to 25c per $1, capped at $260.72 a year (and removed above $180,000 income) ⁸⁹¹¹, and default contributions rise to 3.5% each from 1 April 2026 — the first of a two-stage rise, with a further step up to 4% each from 1 April 2028 ¹². With less help coming from the government, keeping more of your own money — by cutting fees — matters more than ever.

General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.