Fees matter because they reduce your KiwiSaver balance, meaning there is less of your money to invest and help you reach your financial goals.
This doesn’t mean high fees are bad. It’s great if you’re confident you’re getting good value for what you pay. Typically, this will mean getting satisfactory returns.
But you might also be prepared to pay more for great service, or for a provider who invests in line with your values.
We say, make sure you know what you’re paying in fees, and what you’re getting in return.
What fees do I pay?
You might come across these types of fees:
- A management fee which covers the provider’s running costs – such as paying staff and operating costs.
- A membership or administration fee which covers the cost of running your account – such as keeping your balance up-to-date, reporting and newsletters.
- Underlying fees, which cover what your KiwiSaver provider pays to other parties, for example other investment managers, involved in the investment process.
- Performance fees. Only a few KiwiSaver providers charge performance fees, which is when the provider takes a cut of the returns above a certain level of performance.
How much do I pay?
Unfortunately, which of the fees you’re paying and how much you pay can be hard to find out.
Many providers tell you the membership or administration fee you pay – somewhere around NZ$20 to NZ$30 a year.
But sometimes it’s not always easy to find out how much you’re paying in other fees. You might have to go through with a pen and add up many individual fee amounts. This can be so confusing that you might give up.
When you read your KiwiSaver statements, pay special attention to the management fee, because it will be the largest one, up to nearly 2 per cent of your balance every year.
Also check your performance fee, if you’re charged one.
Percentages, for example 1 per cent, can look and sound small. But as your balance grows, those percentages can turn into increasingly large sums of money – all coming out of your balance, every year, regardless of how well your fund performs.
Information correct as at July 2022. Pie Funds Management Limited is the issuer and manager of the JUNO KiwiSaver Scheme. Click here for our Product Disclosure Statement. Any advice is given by Pie Funds Management Limited, and is general only. It relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees if you act on any advice. As manager of the Scheme we receive monthly fees that are determined by your balance and whether you are 13 years or over. We will benefit financially if you invest in our products. We manage any conflicts of interest via an internal compliance framework designed to ensure we meet our duties to you. For information about the advice we can provide, our duties and complaint process and how disputes can be resolved, visit www.junofunds.co.nz. All content is correct at time of publication date, unless otherwise indicated. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary. Please let us know if you would like a hard copy of this disclosure information.