More Kiwis tap savings for deposits as scheme matures
More than 50,000 KiwiSaver members withdrew a combined $2.2 billion to support first-home purchases in the year to 31 March 2026, according to the Financial Markets Authority's 2026 KiwiSaver Annual Report — a 25% jump on the previous year and the largest first-home withdrawal total on record.
That makes KiwiSaver an increasingly significant deposit source for brokers' first-home-buyer clients. Overall withdrawal activity across the scheme also rose, up 15.7% to $6.8 billion.
That increasing dependence on KiwiSaver for deposits has drawn regulatory attention. The FMA has flagged fraudulent use of first-home withdrawals as a priority for 2026/27, with ANZ alone reporting more than $3 billion in first-home withdrawals processed to date, averaging $43,000 per member.
Record balances add to the stakes
The withdrawal surge coincided with record growth elsewhere in the scheme. The average KiwiSaver balance passed $40,000 for the first time, climbing 11% to $40,340, while total funds under management reached $138.8 billion, up 12.8%, driven by $13.2 billion in contributions and $10.7 billion in investment returns.
An FMA spokesperson said the growing balances raise the stakes for how well members understand their KiwiSaver settings.
"For many New Zealanders, KiwiSaver will be one of the largest financial assets they hold, so it matters that members understand their choices and stay engaged over time," the FMA said in its release.
"As KiwiSaver grows in scale, the expectations on providers also increase. Strong governance, fair conduct, and clear disclosure are essential to ensuring that members understand what they are invested in and can make informed long-term decisions."
Engagement rising, but many still on the sidelines
Member engagement improved on several fronts: fund switching rose to 460,000 transactions worth $11.9 billion, and transfers between providers reached a record $7.4 billion, up from $5.5 billion the previous year.
Commerce and Consumer Affairs Minister Cameron Brewer (pictured) pointed to the transfer activity as evidence of a more competitive market.
"If your provider isn't delivering, you can move, and hundreds of thousands of Kiwis did exactly that," Brewer said.
Despite that, 1.42 million members — 41.3% of total membership — were not contributing regularly at year end, and default fund members remain a significant share of the scheme, with more than one-third of new members auto-enrolled into a default fund by Inland Revenue. Fees paid by members reached $978.2 million, up 12.6%, broadly tracking the growth in funds under management.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
