Last updated 21 January 2025

KiwiSaver might not be the first thing on your mind when you’re pacing the floor with a newborn at 3am, or juggling after-school activities, but investing early could give your kids a real financial leg up. But is KiwiSaver the right option for under-18s? And if so, when’s the best time to sign them up? 

Before we get into it, here's the TL;DR version:

• Is KiwiSaver worth it for kids? Yes, starting early gives long-term time in the market to benefit from compounding returns.

• Government & employer contributions? Kids don’t receive these until age 18 under IRD rules, although this has recently been updated to include 16 and 17 year olds within the current KiwiSaver year.

• Best fund types for kids? Growth or high-growth funds are generally suitable due to the long timeframe.

• Access timing? Funds are generally locked in until a first home or retirement.

Is there any point in joining KiwiSaver before 18?

In short: yes. While kids haven't previously been eligible for government or compulsory employer contributions until they’re 18 (and now 16 as per the below update), KiwiSaver is a long-term investment fund and that means the earlier you start, the more time their money has to grow and the returns to compound. 

Updated KiwiSaver eligibilty for 16- and 17-year-olds

In good news for KiwiSaver and kids, the rules around eligibility for kids has recently changed - as of 1 July 2025, 16- and 17-year-olds are now eligible for government contributions. And starting in April 2026, they will also be eligible for employer contributions of at least 3.5% (before tax), if they are opted into KiwiSaver and are contributing employee contributions from their pay. You can read more around the changes from government-run Sorted's website here.

What are the pros and cons of setting up KiwiSaver for children?

The pros

• Compound returns: Starting young gives investments time to grow and benefit from compounding returns, that magical snowball effect where returns earn more returns over time (more info below).
  

• A financial education tool: KiwiSaver is a great way to start teaching kids about money, talking about long-term saving and helping them set financial goals.
  

• A deposit for their first home: Even small regular contributions can add up to something meaningful by the time your child is in their 20s (or 30s) and ready to buy their first home
  

• It’s locked in: Unlike savings accounts, money in KiwiSaver can’t be withdrawn for short-term spending.

The cons

• No government or employer contributions until age 16 (previously 18) - and even then, only if they’re working and contributing themselves. It's worth checking out IRD's KiwiSaver contribution rules here 
  

• Funds are locked in until a first home purchase or retirement - not suitable for short- or medium-term savings goals
  

• Documentation and set-up can take a bit of effort: You’ll need birth certificates, guardian IDs and IRD numbers
  

• Kids gain full control at 18 when the account is legally theirs. This could be a benefit rather than a drawback, but does mean they could make changes you might not agree with

This last point can actually be a great opportunity for a financial conversation with your child, if you haven’t already. Talk to them about why you opened the account, what the savings are for, and how they can use it wisely.

Things to consider when it comes to KiwiSaver contributions for kids

You may be asking "what's the best way to contribute?" when it comes to investing into your children's KiwiSaver funds. There is no one right answer;  it depends on your situation. Here are three examples to illustrate the impact of different strategies, assuming a 4.5% return after tax and fees:

1. One-off lump sum: Put in $5,000 when your child is born, leave it untouched in a growth fund - by age 18, they could have around $11,000, with $6,000 of that being compounding returns.
   

2. Regular contributions: Invest $10 a week from birth. By 18, they’d have around $14,000, with around $5,000 coming from returns.
   

3. A hybrid approach: Start with $2,000 upfront, then contribute $15 a week. That could grow to nearly $26,000 by age 18 - almost $10,000 in returns alone!

All families are different and have different capacities to save, and that’s ok. Even small, consistent contributions make a difference. And once your child gets their first job, you can encourage them to contribute too. Sorted.org has a nifty KiwiSaver calculator that lets you play around with the numbers to show the potential long-term impact of contributions you could make over time: https://sorted.org.nz/tools/kiwisaver-fund-finder/ 

Fees in KiwiSaver when it comes to children's accounts

Fees vary widely between providers and can eat into returns, especially when balances are small. Some providers charge flat annual fees, which can be disproportionately high for kids’ accounts. Most charge a percentage of your balance (e.g., 0.24%–2%).

If you’re starting with small regular contributions, consider providers that don’t charge fixed fees. For example, Simplicity charges a single management fee of 0.24% across all KiwiSaver funds. You can compare fees and providers using tools at sorted.org.nz.

Who can set up and contribute to a child’s KiwiSaver account?

Only a parent or legal guardian can open a KiwiSaver account for a child, but anyone can contribute once the account is set up - grandparents, godparents, aunties and uncles. Instead of another toy at Christmas, a deposit into KiwiSaver could be a meaningful gift for their future.

What fund should you choose?

Because kids typically won’t access their KiwiSaver funds for many years, they’re considered “ideal investors” - they have a long timeframe and can ride out market ups and downs - aka volatility.

That means growth or high-growth funds are often a good fit. They’re more volatile in the short term but can deliver higher returns over time. As always, think about your goals and risk tolerance. Our Fund Finder tool is a great place to help you find the right fund for your child, or you can check out the one from Sorted.org here.


Is KiwiSaver always the right option?

Not necessarily. Some parents might prefer to keep savings more flexible - so it can be used for education, travel or other goals. In this case, non-KiwiSaver investment funds might be a better fit as they offer easier access.

In some cases, families choose to do both: KiwiSaver for long-term savings and another investment account for shorter-term goals.

Final thoughts

Whether you start with $10 a week or a lump sum from grandma, KiwiSaver can be a smart way to set your child up for the future. And it’s not just about the money - it’s about starting conversations and building good money habits from the beginning. If you’ve been meaning to get around to it, there’s no perfect time - just start. Because the earlier you plant the seed, the more time it has to grow.

How to open a child's KiwiSaver account

These are the steps you would generally take to set up your child's KiwiSaver account:

• You’ll need the child’s IRD number 

• Make sure you have your identity documents and the child's birth certificate on hand

• A parent or guardian must sign up to your preferred provider on the child’s behalf if the child is under 16

• If the child is 16 or 17, at least one legal guardian will need to co-sign the application

• Fill out the join form and then follow any further prompts from the KiwiSaver provider

• Contributions can start at any time once the KiwiSaver account has been set up

More resources

Podcasts:
Money Made Simple #4 | The magic of compounding returns, explained
Money Made Simple #22 | Nest eggs for little Kiwis: Is KiwiSaver the best way to save for your child’s future?

Blogs:
Why you should open a KiwiSaver account for your kids, by Sam Stubbs (published on Stuff)
Skip the plastic and gift children a better financial future

Other websites:
sorted.org.nz
MoneyHub - KiwiSaver for Kids


KiwiSaver for kids FAQs:

Q: Can a child join KiwiSaver?

A: Yes, although the parent or legal guardian must co-sign the application for a 16- or 17-year-old, or fill out the application themselves is the child is under 16

Q: When do government contributions start for KiwiSaver under-18s?

A: If your child is aged 16 or 17, they now qualify for government contributions, as long as they meet other eligibility requirements. You can read more about governnment contributions in our blog here

Q: Can grandparents contribute to a child's KiwiSaver fund?

A: Yes, one-off contributions and recurring payments can be made into a loved one's KiwiSaver account, as long as the person gifting has some key details for the child. For Simplicity accounts, we have provided simple instructuions on how to gift into a member's KiwiSaver or Investment Fund account here.

Q: Should I choose growth or conservative funds for a child?

A: Given longer time horizons for children, higher growth funds are typically more suited to children than more conservative fund types. However, choosing a fund type is personal and should consider not just their investment time horizon but also risk appetite and goals. Sorted has a great fund finder tool here.

The information provided and opinions expressed in this post are intended for general guidance only and not personalised to you. These materials do not take into account your particular financial situation or goals and are not financial advice or a recommendation. This post is not intended to convey any guarantees as to the future performance of any of the investment products, asset classes, or capital markets mentioned. Past performance is no guarantee of future performance. Information is current at the time of posting, and subject to change without notice. Simplicity NZ Ltd is the issuer of the Simplicity KiwiSaver Scheme and Investment Funds. For Product Disclosure Statements please visit our website simplicity.kiwi.