Kiwisaver - Rise & Falls - Are you Protected?

With the sharemarkets around the world in turmoil in June 2022, many people are getting concerned as their KiwiSaver balances are dropping. But some people feel comfortable as they have protections in place. High inflation, rising interest rates, the fear of recession and the ongoing war in the Ukraine are combining to put real pressure on markets.

Keep interested in your funds.  Always ask your provider/financial adviser to update you on how your KiwiSaver is doing.  Learn how to understand the market and why it rises and falls. You should also know how your fund compares to others. You should look at: diversification, managing asset allocation and downside mitigation. These are three important components that you should ask about and have answers from the fund manager who looks after your KiwiSaver funds.



It’s been a tough year in 2022.  Many investors have been used to the good times and are not prepared for times like we are currently in. Sadly, many investors and fund managers have seen investments erode this year, and yet some others are performing okay. KiwiSaver is a long-term investment, so overall there will be periods where it falls and later bounces back.  What you should keep an eye on is when your KiwiSaver drops while others don’t. That’s the time when you should consider why that is happening and ask yourself if your fund manager is looking after you and your money.


Diversification is good, but it isn’t what it used to be. The problem is that most KiwiSaver fund managers have diversified by investing in both shares and bonds, but when both fall so does your investment value. For 2022 to date, the financial markets have been falling.   Sharemarkets are down around the world with the S&P 500 down over 15% this year and the NASDAQ is down 25% and this is not just isolated to the US sharemarket. The local New Zealand and Australian sharemarkets have felt the impact too. At the same time the bond markets have had their worst start in decades.



A lot of financial advisers and KiwiSaver providers talk about the various asset allocations that are used depending on your tolerance for risk and time for an investment. The general rule is: if you are investing for longer then you can usually accept a higher level of risk in the hope that over the long-term you will get a larger return. The Sorted Website illustrates the five common types of funds (as below).  While these are recognised, each KiwiSaver provider structures the funds slightly differently, has different names and the investment strategy and underlying investments will also differ.


It is becoming more popular to automate a Kiwisaver fund selection by using a life cycle option that some providers have. This way the fund selection gets rebalanced automatically as you get older and nearer to retirement. It helps avoid being caught out in a higher risk fund, especially as some people do not have a financial adviser who regularly reviews their KiwiSaver investments.  Some KiwiSaver providers have an option for you to select a “life cycle” option. This adjusts the asset allocation as you get older and therefore keeps you with an asset allocation that matches with your age. It’s a “set and forget” type of allocation where the provider makes the adjustments automatically for you and ensures that you are not taking more risk than your investment timeframe deems appropriate.



What is Downside Mitigation and Does it Work?

You may have heard people talk about “downside mitigation”.  What is downside mitigation? Essentially it is having strategies in place that aim to reduce the frequency and/or magnitude of capital losses, resulting from significant asset market declines. One such strategy is to purchase options which insure against negative market movements.  We pay for insurance policies, such as house and car insurance, to cover us if our house burns down or we are in a car accident. But most people don’t have their investments, such as Kiwisaver, insured.  Most people don’t really like insurance costs as its money spent in the hope that something doesn’t happen.  Of course, when events do happen, there’s often regret that they didn’t have insurance.



Like any investment it is important to take the time to review your Kiwisaver performance including how it is set up and how it performs over time. You can check to see if your fund is too diversified in the current downward market, whether your asset allocation should be more conservative, and that you have downside mitigation (such as insurance policies) in place to protect your funds. Financial advisers often recommend that you consider all three components particularly when selecting which fund manager/provider you want to look after your KiwiSaver funds.

We have a group of excellent financial advisers that we work with and refer our clients to as we have investigated their ethics, professionalism and high standards. This group advisers have proven to us/our clients their high standards of ethics and professionalism. Our clients can be confident that the financial advisers we recommend are: reliable, reputable, experienced, honest and are working in your best interests. It’s important to us, and our clients, that we only refer to the best in any given sector. So, if you have questions about your Kiwisaver funds and need financial advice, simply give us a call at Gina Jansen Lawyers, West Auckland, on 09 8695820 or email us at and we can refer you to an expert financial adviser.   

Gina Jansen Lawyers are based at 9C Moselle Ave, Henderson, West Auckland but provide nationwide legal services with offices by appointment in Raglan and Ngaruawahia in the Waikato. Gina Jansen is an Accredited Specialist of the Property Law Section of the New Zealand Law Society. The above article is not legal and/or financial advice and is intended as a guide only and cannot be relied upon as legal advice. Legal advice specific to your circumstances should always be obtained. Our legal services include: property, conveyancing, trusts, estate administration, wills and enduring powers of attorney, relationship property settlements, divorce, Inland Revenue tax debts and disputes, bankruptcy, liquidation, commercial and business law. We welcome enquiries by phone or email.  We can provide referrals to a highly recommended group of chartered accountants, insurance brokers, financial advisers, mortgage brokers. Contact us for details by phone on 09 8695820, 0800 544508,  or refer to our website