Is KiwiSaver still the best option for self employed?
Monday, 13 July 2026
Retirement questions Answered: from time to time, we will pick a question sent in by a reader and offer a response from personal finance writer Gill South. You can submit questions below.
I’ve always just assumed that contributing to KiwiSaver was a no-brainer. Having written about it since its inception 2007, you could say I’ve drunk the Kool-Aid. Even as a self-employed person with no employer to match my contributions, it has always made sense, I’ve thought. But a reader question this week prompted responses from my KiwiSaver experts that have made me question my assumptions.
Our reader, Marilyn* asks: 'Now that the government annual contribution has fallen to $260 per annum what is the benefit of having KiwiSaver over other savings schemes given the restrictions around it such as the difficulty in accessing your money in times of hardship?'
Rupert Carlyon, founder of Kōura Wealth, which has a next-generation KiwiSaver plan, gives me a response that truly hits me between the eyes.
“The honest truth is that for anyone that is self-employed or on a Total Remuneration policy – (effectively meaning they pay their employer contribution) the economic rational thing to do is contribute the $1,042 per year to get the $260 and put everything else in a different saving or investment option,” says Rupert.
I’ll just let that sink in for a minute. Whaaat?
When he is advising a client about whether they should contribute to KiwiSaver or an alternative savings/investment scheme, Rupert asks them a series of questions.
Will you be disciplined enough to keep investing each week even when things get tough? (Yes, of course, mostly)
How will you set it up so that the money comes out of your bank account immediately after you are paid so that you are not tempted to spend it? (Easy!)
Can you find an alternative investment vehicle that allows you to invest $20 per week with very low ongoing fees with no transaction fees? (Hmm…)
And are you comfortable managing your own investments. (Not really but I have people I trust to do that for me and I’m happy to pay them).
KiwiSaver is easy and effective and while not necessarily the most economically rational decision for many people, from a behavioural perspective, it is, says Rupert.
The Kōura Wealth founder says he often hears of people approaching retirement suddenly investing in get-rich schemes because they are short of retirement savings. I remember friends’ parents losing their life savings investing in high interest financial products offered by finance companies in the early 2000s, which then collapsed in 2006 to 2012, so I learned a lesson from that period.
With a KiwiSaver fund, you are protected from these tempting and often disastrous decisions made out of desperation, says Rupert.
The other truth no one wants to admit is that the lock-up nature of KiwiSaver - no touching until 65 - can be a massive benefit for many people, says Rupert.
Meanwhile for New Zealanders who are employed, KiwiSaver remains very attractive, says Dean Anderson, CEO of Kernel Wealth, another innovator in the KiwiSaver space.
The real engine of KiwiSaver was never the Government top-up, it’s the employer contribution, he says.
If you’re on a standard employment agreement, Marilyn, the fact that your employer has to match your contribution – currently at 3.5% and that’s planned to rise to 6% if the coalition government gets in – makes it dollar for dollar, a much bigger deal than the annual $260 government contribution, says Dean.
The Kernel chief executive agrees that there is less of an argument for KiwiSaver for the self-employed and those on total remuneration contracts. For this reason KiwiSaver will need political attention if it is going to keep working as intended for everyone, he says.
The beauty of KiwiSaver remains that it is a retirement vehicle, not a savings account and its restrictions that stop it being raided before it’s had time to compound, says Dean.
In the last couple of years, we’ve all heard the stories of how people have attempted to raid their KiwiSaver fund during these times of unexpected redundancy and so on, so we know that to be true.
KiwiSaver advisers have had a plethora of hardship pleas from clients and few of them were granted, people having to find alternative ways to manage financially.
Regular investing, automatically and stuck to over decades is one of the hardest things to do on your own, and one of the most effective things you can do for your future, Dean tells me.
He gives me an interesting vision – that plenty of Kiwis will end up just as well off in retirement, through investing and KiwiSaver, without ever having owned a house.
That’s another idea that’s going to take me time to digest. How very European.
Dean points me to a Stuff article all about this.
Well done for asking your question Marilyn, you’ve made us all think.
Gill South is a freelance business writer who has authored a book on personal finance and written for many major publications in New Zealand.
*Disclaimer: The information in this article is of a general nature and is not intended to be personalised financial advice. The name of the individual in this story has been changed to protect their privacy.