Read the fine print of your KiwiSaver and other policies – and save thousands

From your KiwiSaver to your bank account to your insurance, it pays not to skip over the details. Frances Cook outlines the ten-minute tweaks that could save you a lot.

Here’s the thing about financial safety nets. Most of them only catch you if you know where they are, and how to land on them just right.

The money world is full of rules that look like protection, but only really work if you’ve read the fine print, understood the definitions, and set things up deliberately.

Just taking an extra 15 minutes to set something up properly, could mean a difference of tens of thousands.

So here’s how to build a financial shield that’s built on strategy, not luck, in as little time as possible.

If you were auto-enrolled into KiwiSaver, and never did anything past that, you’re probably in a default fund.

Which can be a problem, because those default funds are really designed to be a holding pen, while you decide on the best KiwiSaver for you.

They’re balanced funds, which means they don’t take many risks with your money, but also don’t make much back for you.

You could be putting that exact amount of money into a different type of fund, and have tens of thousands more by the end of your career, just because you picked a few different settings years ago.

According to Financial Markets Authorty numbers from 2023, 324,689 New Zealanders are in default funds. That’s not including the people who actively decided that those funds were the best choice for them. That’s just the number of people who were plonked into those funds, because they never made a choice about what to do next.

You don’t have to do anything fancy. Just a ten-minute check, to be sure your money is working hard for you in the background.

Check your fund. A good rule of thumb is that, if you’re planning to use it in less than five years, then conservative might be the best choice. Longer than that, particularly ten years or more? Growth or aggressive is probably better.

You can use Sorted’s Fund Finder to quickly match your settings to your goal and life stage.

Ten minutes of your time, for potentially tens of thousands in difference? That’s a good ROI.

Insurance has to be one of the worst for fine print, but also one of the most important to get right.

The trick with this? Don’t skip telling your insurer about something, in the hopes of getting a cheaper deal. It could mean your entire policy is cancelled, with no payout, right as you need it.

The rules in New Zealand don’t differentiate between accidentally not telling your insurer about something, and deliberately. So make sure that, as you apply for the policy, you answer every question as honestly and truthfully as you can.

While you’re at it, keep a record every time you disclose something, just to be sure you can back yourself up in future.

That said, insurance is becoming hideously expensive. So there are three possibilities for cutting the cost.

First, you could raise your excess. Being willing to pay more yourself, in the event of items needing replacing, usually means a smaller monthly payment.

Secondly, see if your employer has a scheme where they’ll pay for your insurance for you. Many larger employers do, as they can get bulk deals that are cheaper for them than giving a pay rise, but still very much worth it for you.

Lastly, if you’re part of a union or professional organisation, see if they have discounts. These are often there, but poorly advertised to members.

The good news is that your bank account has more protection than it used to. That's because New Zealand’s long overdue deposit protection scheme has finally arrived.

If your bank fails, your savings are now insured up to $100,000 per person, per licensed bank.

Great. About time. Until now, we were one of only two countries in the OECD that didn’t have this protection. The other was Israel.

But you might still need to get tactical. Considering that banks and term deposits are the “safe” choice for cautious investors, you do need to know how to work this system.

Business owners and retirees are among the groups that could have over $100,000 sitting in bank accounts.

If you’re in a couple, you’re each covered for $100,000. That joint account can therefore get up to $200,000.

Or if you have more, you could split those savings across two different banks, meaning each account is now covered up to $100,000.

If you’ve saved up $150,000 to guide you through your golden years, and the worst happens, let’s make sure that extra $50,000 isn’t toast. (Bank failures are rare, especially in New Zealand, but not impossible.)

A few minutes of homework can make a big difference on this front, and make sure you’re getting the most from systems that aren’t built to hold your hand.

So here’s your checklist:

None of this needs to take more than 30 minutes. But it could save you thousands.

The information in this article is general in nature and should not be read as personal financial advice.