Do I pay tax when withdrawing KiwiSaver?

I have recently turned 65. My KiwiSaver has been underperforming for the past couple of years. I have contacted ANZ, who put me on to a financial adviser. Everyone I speak to has said all KiwiSaver funds have been underperforming and never change when the market is down. I have just looked at mine again today and in the past year my contributions were $7458.77 but my investment loss was $9438.75.

How long do I keep flogging a dead horse? My KiwiSaver is the OneAnswer Single Asset Australasian property fund and I have been in it 13 years and nine months. Given my age, I should be in a more conservative fund but I have been too cautious about moving when everyone else tells me not to. I just believe that I will keep getting the same result if I keep doing the same thing.

My question is, if I change my KiwiSaver provider although there is no fee to change, how much will I end up paying in tax when I close one provider and start with another ie: OneAnswer over to Milford?

Thanks for your question. Single-asset funds like the one you are in can perform differently to more diversified funds, and be even more volatile because they are focused on just one asset class.

I see in the most recent Morningstar data that the fund is down 6.1% during the past three months and 5.4% during the past year.

On a 10-year basis, it has returned 1.8% a year. That’s third best of the property funds but significantly less than a standard conservative or balanced fund.

You presumably had good reasons for choosing that fund at the time. It’s worth weighing up whether they still apply. You’re right that the traditional advice is not to move funds when markets are down because it just locks in a loss – it becomes a little more nuanced if you’re considering shifting from a single-asset fund to a diversified option.

David Boyle, who is head of sales at Mint Asset Management, says there’s a real challenge to investing in one asset class.

“Property has had a torrid time over the last few years with Covid and rising interest rates. I would suggest without knowing what other investments they might have, before shifting funds they seek a little financial advice from licensed financial adviser.”

As for the tax implications, you won’t pay anything when you move from one provider to another. KiwiSaver contributions come from taxed income, and the returns made in KiwISaver are taxed, but withdrawals from the scheme are untaxed.

SUNGMI KIM Susan Edmunds is Stuff’s Money Editor. Send your questions to susan.edmunds@ stuff.co.nz Contributions to KiwiSaver come from taxed income, and returns are taxed.