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Freelancer’s guide to KiwiSaver

by Alysha Richards

Being a freelancer has a lot of perks - more freedom, more autonomy, and complete control over what work you take on (and who you work with). But there are, of course, drawbacks.
One of those drawbacks is not having an employer to make KiwiSaver contributions on your behalf.


New Zealand employers are obligated to contribute at least 3% to each employee’s KiwiSaver fund - provided they meet certain requirements. But freelancers don’t have that employer/employee relationship to lean on for retirement funding.

This makes it all the more important for freelancers to know the ins and outs of KiwiSaver - so you can get the best possible start on saving for retirement. 

This guide is designed to help you understand how to use KiwiSaver as a freelancer and get the most out of it.

In this guide we will cover:

So let’s get started!

Mistakes first-time KiwiSaver contributors make

It’s easy to make mistakes with your KiwiSaver - especially when you don’t know how it works or have any financial plans in place. Here are some of the biggest mistakes freelancers make with their KiwiSaver: 

Mistake #1: Not signing up to KiwiSaver sooner. One of the first things you’ll do in a new PAYE job is set up your KiwiSaver. Freelancers don’t have that prompt, they have to do it on their own - and many fail to sign up soon enough. Compound interest (Einstein’s eighth wonder of the world) needs time to work its magic, so every year you put it off represents a big setback in your retirement savings.

Mistake #2: Not knowing where your money is being invested. Your KiwiSaver savings could be sitting in a default/conservative fund, with over 20 years to go until you need to withdraw it, earning you minimal to no returns. Or even worse, they could be invested in products you don’t support or believe in such as weapons, alcohol and tobacco, animal testing, or something else you’re morally opposed to. 

Mistake #3: Not contributing enough. A lot of freelancers treat their KiwiSaver like it’s an expense and not an investment. Making a bigger contribution now means you’re going to be better off in the future. And just by putting a minimum of $20 a week into your KiwiSaver account means you’ll be entitled to the full government contribution (see below). That’s an extra $521 per year for free - and who doesn’t like free money?

Mistake #4: Paying too much tax on your KiwiSaver (or not enough). Your Prescribed Investor Rate (PIR) is used to work out how much tax you pay on your investment earnings - in this case, your KiwiSaver earnings. Making sure your PIR is correct on your KiwiSaver account can help you avoid unnecessarily overpaying your tax, or worse underpaying your tax - resulting in an unexpected tax bill. 

So, how do you avoid these mistakes? Just by knowing the basics of KiwiSaver - let’s get started!

What is KiwiSaver?

KiwiSaver is a government-created scheme that was started to help all New Zealanders save towards their retirement. KiwiSaver first started in 2007 and has now grown to have over 3.1 million Kiwis enrolled across 28 different providers (and more popping up every year). KiwiSaver is an investment where you choose which KiwiSaver Scheme provider you want to invest your savings with, which you can change at ANY time. Each provider has a list of funds you can choose from to invest your savings in which range from low-risk conservative fund types to higher-risk growth fund types (more on this later).

If you’re a PAYE employee, then your contributions to KiwiSaver will be matched by your employer. But if you’re self-employed, then your contributions to KiwiSaver won’t be matched by an employer, but the government will contribute a little bit annually (as long as you’re reaching certain contribution levels).

You also - in certain situations - have the option to withdraw your KiwiSaver savings. One of the most common situations is withdrawing your KiwiSaver savings to go towards the purchase of your first home (more on that below). There are other situations where you can also withdraw your savings, such as: moving permanently overseas; financial hardship; or serious illness. Kiwisaver withdrawals for these are only approved on a case by case basis - so it’s best not to treat your KiwiSaver account like a savings account if you’re looking at using those savings for anything other than your first home or retirement.

Contribution Rates: How much should you save?

The standard contribution rates for KiwiSaver on a salaried job include 3%, 4%, 6%, 8%, or 10% (or more if you choose to make further voluntary contributions). How much of your pay you put towards KiwiSaver really depends on your budget and your financial goals (but more on that later).

You can set or change your contribution rate at any time; most commonly this will occur when you open your KiwiSaver account or start a new job.

If you’re self-employed, then you decide how much you want to contribute and on what basis - there are no minimum or maximum amounts with self-employment. You can also choose to contribute to your fund directly through the IRD! 

If you’re a Hnry customer, then contributing to your KiwiSaver is super easy. All you have to do is set up an automatic percentage allocation within the Hnry app and you’re all set to go. Whenever you get paid into your Hnry Account your KiwiSaver percentage will be paid directly to your provider, along with all your income tax, GST, ACC, and other allocations.

What to consider when setting up your KiwiSaver account

There’s a lot to think about when it comes to setting up your KiwiSaver account, but here are the three main things you’ll need to consider before investing your savings:

  1. Choosing a KiwiSaver provider
  2. Working out your financial goals and risk appetite to help you decide what investment type is right for you
  3. Choosing which fund or mix of funds you want to invest in

Firstly - How do you choose a provider?

KiwiSaver providers vary from each other, so it’s important to know what you’re looking for and do some research before choosing one.

You will find a lot of providers are doing some extraordinary things that make them stand out from the crowd, such as: having socially responsible investment funds; having investments in New Zealand companies and property; donating part of their fees to charity, and supporting Kiwi research and innovations.

Some people aren’t particular about what provider they choose, but choose based on what fund(s) they want to invest in. That’s okay too - to find the fund that’s most appealing to you and simply go with the provider who manages that fund.

Regardless, choosing the right provider is all about the time you have to invest and your values. So take some time, do the research, and find out what KiwiSaver provider best suits you. You can find an entire list of them here.

Then - establish your financial goals and/or risk appetite

Before you can select what fund(s) you’re going to invest in, it is essential that you understand and decide on two things: your financial goals and your risk profile.

1. What are your financial goals?

What are you going to be using your KiwiSaver on first? Is it solely for retirement? Or do you plan on using it to help purchase your first home? And what is your timeline for that goal? Knowing what your financial goals are for your KiwiSaver savings and how much time you have until you’re wanting to withdraw it, will help you figure out what investment type may be right for you.

If you’re looking to use your KiwiSaver savings in the next 0-3 years because you have a big expense on the horizon, then a defensive or conservative fund might be best to save you from any losses if the markets were to fall.

If your timeframe is around 5-9 years a balanced fund could be your best option, so you can get some good returns but also not make any major losses.

If your timeframe is over 10 years, then a growth fund could be best suited for you - maximising your returns over a longer time period.

But these are general guidelines; your situation or your risk profile might be different.

2. What is your risk profile?

The second thing you need to think about is how comfortable you are with taking risks - and I’m not talking about swimming with sharks or jumping out of a plane risk. This is determining your appetite for how much financial risk you’re willing to bear to make bigger returns. Finding out how comfortable you are at potential risk and return is important when choosing a KiwiSaver fund to invest in.

  • If you’re not comfortable with small rises and falls in your savings value then you may be best suited to a defensive and conservative fund. These have a lower risk and but also a lower expected return with only small movements in the value of the fund. 
  • If you’re comfortable with taking a moderate amount of risk then a balanced fund could be right for you. They have a slightly higher risk than conservative funds but have more moderate expected returns with only moderate rises and falls in the value of the fund. 
  • If you’re okay with taking bigger risks to aim for a bigger return a growth or aggressive fund is a riskier fund but has a higher expected return with significant rises and falls in the value of the fund.

At the end of the day, it’s up to you, and no one else, to decide what type of fund you want your KiwiSaver savings to be invested in - as this is your money. Take some time, do your research and figure out what you want out of your KiwiSaver savings and what fund is going to help you achieve this. 

Lastly - find the right KiwiSaver funds for you

Once you understand how you want to invest your money, you’re ready to choose your KiwiSaver fund!

But first, let’s answer an important question.

What is a Kiwisaver fund?

Most non-cash KiwiSaver funds are composed of stocks and bonds from hundreds (sometimes thousands) of companies. When you put money into a fund, you’re buying a very small amount of each of those companies. Think about it as buying a packet of jelly beans. You’re not expecting to open the packet and find just one colour of jelly beans, you’re getting a mix of different colours, and percentages of those colours.

KiwiSaver funds are made up of two main asset types - income assets, such as bonds (conservative funds), and growth assets such as shares (growth funds), with some having a mix of both income and growth assets (balanced funds). Take a look at your own KiwiSaver fund and you’ll be able to see a wide range of different companies that you’re investing in.

That range of investments is called diversifying, and it reduces your risk. Basically, if one of the companies in your fund suddenly declared bankruptcy, your KiwiSaver wouldn’t take a huge loss as long as that company comprises only a small percentage of your fund’s investments. has a great quiz you can take to compare providers, the funds they have to offer, with the amount of risk you’re willing to take!

The two most common points of comparison for funds are their fee structure and type of management.

Management type

This refers to how the fund’s investments are managed.

Passive management means the investments are automatically selected based on certain criteria (e.g. the 50 biggest stocks on the NZ stock exchange). Passively managed funds tend to change very little over time, and there is no person or group devoted to choosing the investments that are part of that fund.

Active management means the investments are selected by fund managers behind the scenes. The fund managers and people investing in their funds believe that they can get an edge on the market by constantly adjusting what investments go into the fund.

Fee structure

Another difference to look for is the fee structure.  Ultimately, this all boils down to one question: how much is this fund going to cost you in the long run?

The fees can come from a few different places:

  1. Management fees - a percentage fee (assessed monthly or annually) based on the amount of money you have invested
  2. Administration/Membership fees - a fixed membership fee assessed monthly or annually
  3. Performance fees - a percentage fee based on the earnings of the fund (this usually applies to actively managed funds)

In general, the more active a fund’s management, the more it will cost to invest in.

Choosing a fund

Now that you know what you’re looking for, it’s time to choose a fund. What you’re looking for is a fund that meets all of your criteria:

  1. Aligns with your goals and risk profile (conservative, aggressive, or somewhere in between)
  2. Meets your fee expectations
  3. Has the type of management you’re looking for

Along with whatever other criteria you want to throw in, such as ethical criteria, geographic criteria, or anything else.


Added benefits for Kiwisaver investors

There are some additional perks that come from being a KiwiSaver investor, including free money!

Free money - the government contribution

Everybody likes free money right?

Well, for freelancers who don’t have employer contributions, the government contribution is a good boost for your KiwiSaver. As long as you contribute $1042.86 of your own money into your KiwiSaver each financial year (between 1 July to 30 June), then the government will contribute an additional $521.43 into your account!

That’s as little as contributing around $20 a week into your KiwiSaver account!

Even if you don’t make the full $1042.86 contribution, the government will still give you 50 cents for every $1 you put into your KiwiSaver account, up to that maximum of $521.43. However, you must be living in New Zealand and be over the age of 18 and under the age of 65 to be eligible for the government contribution.

Benefits for first-home buyers

If you’re a first-home buyer, then you can apply to your KiwiSaver provider to withdraw almost all of your KiwiSaver account to go towards the purchase of that house. Provided you qualify for the first-home buyer withdrawal, your provider will be obligated to allow the withdrawal to occur.

Keep in mind, however, that it can sometimes take more than 10 business days for your provider to process the withdrawal, so you need to ensure that your settlement date gives you enough time to get that application processed.

The other great benefit is the government can also help by putting money towards your deposit for your first home as well - this is called the First Home Grant. As long as you’ve been contributing to Kiwisaver for three years and meet the income requirements, you could be entitled to up to $5,000 ($1,000 per year you’ve contributed to KiwiSaver, to a maximum of 5 years).

If it’s a new build, then you could be entitled to a grant of up to $10,000 ($2,000 per year you’ve contributed to KiwiSaver). If you’re also buying a house with a partner/friend/family member who is also in KiwiSaver, they may also be able to receive this grant.

Hnry is also making this easy for freelancers to secure a mortgage. As part of the service, you get access to payslips for every payment that comes through your Hnry account. Without being in a salaried job you don’t get the benefit of payslips and therefore it’s hard to prove to the bank that you have a stable income. With Hnry, each time you get paid we automatically send you your very own payslip that is recognised by IRD and ASB. We can even provide financial income reports to help you prove to the bank that you have a steady income and can make those repayments on your mortgage.

Free financial advice

Financial advice is not something many of us have access to when making important financial decisions. Especially when this is an extra cost that most freelancers can’t afford to pay.

However, some KiwiSaver providers can offer you this service at no extra cost!

Not only are they able to help you make sense of everything KiwiSaver, but they can help you with your financial goals and put a plan in place to help you achieve this - particularly if you’re wanting to buy that first home sooner or you want a luxurious retirement. They will put you on the right path and help you make those tricky decisions when it comes to where to invest your money and how much risk you should be taking.

Keep in mind, however, that the final decision is always yours. It’s down to you to make the investment choices that are best for you.


The more you know about KiwiSaver and how it all works the better you’re going to be financially in the long run - and the sooner you start, the better off your investment is going to be once you hit retirement age - or when purchasing your first home.

Being equipped with the right tools and knowledge, you can now go and make an active decision as to which provider and fund(s) to invest with to build some financial momentum.


DISCLAIMER: The information on our website is for general educational purposes only. It doesn't cover all situations and circumstances, and shouldn't be taken as direct tax advice. If you're looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.

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