How billions in KiwiSaver quietly fund Wall Street – and the case for backing NZ Inc instead

Thursday, 2 July 2026

Over 60% of New Zealand’s $123 billion KiwiSaver pool is invested internationally.

VC investments are growing, but NZ still lags far behind Australia's 4.4% allocation.

Proponents view local investing as a national win-win, while critics argue returns and liquidity must always come first.

Analysis: New Zealand currently has more than $123 billion in KiwiSaver, more than double what we had just five years ago.

Data from the Financial Markets Authority shows approximately 40 to 45% of that is allocated to international equities, while a further 20% goes into foreign fixed-interest investments and bonds.

These allocations are even higher for those who have their KiwiSaver in growth or high-growth funds.

But is this a desirable situation? Should our national savings be used to line the coffers of big international firms, or should money be working harder to support our local businesses here in New Zealand?

These questions are at the centre of a growing discussion that has both personal and national relevance amid our growing KiwiSaver pool.

KiwiSaver provider Generate recently broke the $100m threshold in terms of funds allocated to the local venture capital (VC) market.

That money comprises a $20m investment in Icehouse Ventures' Growth Fund II, $20m in Growth Fund III, $20m in Movac, and four $10m direct co-investments in New Zealand startups Halter, Hnry, Partly, and one more yet to be announced.

Generate’s chief investment officer, Sam Goldwater, tells me the relationship between KiwiSaver providers and New Zealand is still relatively new when you consider that there was absolutely no VC funding only a few years ago.

Goldwater isn’t acting alone in this space. Booster and Pathfinder have also increased their stakes in the local startup scene through VC investments, and if we do follow the Australian example, we may see that investment continue in the future.

Approximately 4.4% of the nearly $4 trillion in Australian superannuation funds goes to the VC scene in that country, compared to only 0.2% in New Zealand.

Generate is something of a local outlier in this space, with Goldwater telling me that his firm’s allocation sits at roughly 3%.

The question then is whether providers should follow suit and whether more of our retirement funds should go toward building NZ Inc.

Icehouse chief executive Robbie Paul sees this as a win-win situation for New Zealand.

“What excites us most about KiwiSavers investing is the double win it can deliver to New Zealand,” says Paul.

“The first, of course, is that Kiwis financially benefit from companies that go global. The second is that Kiwis' aspirations grow as a result of being closer to Kiwi success stories. There is no doubt that Rocket Lab's success has prompted many Kiwis to aim higher.”

The things to watch

It’s easy for Hamilton Hindin Greene investment adviser Jeremy Sullivan to see why the VC and startup community is eager to see more KiwiSaver funds flow into funding for our startup ecosystem.

“KiwiSaver is one of the few natural pools of long-term capital in New Zealand,” says Sullivan.

“That makes it a potentially good fit for venture capital, because startups need patient capital and many KiwiSaver members, particularly younger members in growth funds, have long investment timeframes.”

Sullivan says that if this asset class is sized appropriately, it can serve the valuable purpose of supporting the startup community while also giving Kiwis a cut of local success.

“That said, it should not be treated as a nation-building exercise at the expense of members,” says Sullivan.

“The first obligation has to remain the retirement outcome of KiwiSaver investors.”

Professor Claire Matthews, the head of the School of Accountancy, Economics and Finance at Massey University, echoes this sentiment, saying she doesn’t have a problem with the idea of investing more New Zealand money in New Zealand businesses, but warns that it’s important not to lose sight of the overarching purpose of KiwiSaver.

She says that KiwiSaver funds aren’t a national asset.

“They are, in fact, assets owned by individuals who can and should be the ones deciding what type of funds they are invested in,” says Matthews.

“One approach could be to encourage at least some KiwiSaver providers to offer one or more funds that do allocate substantial funds to VCs, so that it is an option for members if that is of interest to them.”

However, Matthews warns that there are some challenges this could run into.

“For many members, it is likely that the risks associated with VCs are too great, and the liquidity issues could be challenging for providers to manage in relation to withdrawals and transfers unless it was a relatively small proportion of the fund’s assets.”

Liquidity is a big issue when it comes to startups. Money locked up in these firms can’t be easily accessed. It generally takes a company sale or public listing for Kiwis to have access to the funding, which can make it risky for providers who need to provide liquidity to members looking to withdraw their funds for hardship, retirement, the purchase of a first home or when switching funds. This is why even Australian funds keep their VC proportion relatively small.

The key message to take from Matthews is that it pays to be aware of what your KiwiSaver fund is invested in and then decide whether or not you are comfortable with the level of risk being taken. If not, then you can always opt for a different fund or a different provider.

Broader problems

Simplicity founder Sam Stubbs has been a large supporter of the startup ecosystem in New Zealand, and he has developed a more nuanced view on this issue.

“You may be surprised to hear that I don't think any more help is needed for startups,” he tells me.

“Over the last five years, access of start-ups to VC funding has increased significantly, not only through KiwiSaver and Investment Funds, but also through a thriving network of High Net Worth individuals and trusts.”

He says there’s plenty of money to go around, but it largely depends on the ask from the startup.

“The problem is when they stop asking for $1m and start asking for ten and twenty times that,” says Stubbs.

“It’s a significant number for New Zealand, but still too small to get the likes of Silicon Valley interested.

Because many Kiwi startups end up in this mid-zone where they’re too big for New Zealand but too small for Silicon Valley, addressing this problem is difficult.

“That will happen as KiwiSaver grows, because people like ourselves will be able to fund the bigger cheques required,” Stubbs says.

“It takes time, but with KiwiSaver, time is our friend.”

So what’s your view on this? Should more KiwiSaver funds be allocated to startups and VCs? And if so, how should it work?