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Retirement planning isn’t just about KiwiSaver or property.
For self-employed Kiwis, KiwiSaver’s biggest drawcard has always been the government contribution. But since that contribution was halved in July, confidence among business owners has taken a hit, and some have even stopped contributing altogether.
The reality? When you’re running your own business, retirement savings often slip down the priority list. Without automated deductions like employees have, it’s easy to neglect your future self while juggling everything else.
So, what’s the smart move now? We asked James, a Velocity Financial Adviser who works with business owners every day, for his advice on how self-employed Kiwis can build a strong retirement plan and what options exist beyond KiwiSaver.
James: Absolutely. KiwiSaver isn’t just for employees. It’s one of the most efficient ways to grow your retirement savings because of the government contribution. Even if it is less, it is still free money, and no other investment gives you that. And with the magic of compounding interest, it adds up over time. So, make sure you’ve got an automatic payment in place to lock it in.
James: Yes, it can be, and this is why many savings are neglected, or voluntary payments are forgotten or missed. The sad thing is that when that happens, business owners are missing out on the magic of compounding interest as well.
James: The best way it to fully automate the process. We call it “paying yourself first”. You can set up a direct debit through your KiwiSaver provider, the bank or your accountant or accounting software. The funds go out before they can get touched or used for anything else. Then you know that your minimum KiwiSaver contribution has been met, and you get the government top up each year.
James: That’s right. KiwiSaver funds are locked in until age 65, unless you’re buying your first home, facing serious financial hardship, have a serious illness, or permanently emigrate (excluding to Australia). This is why we often suggest a mix of KiwiSaver and managed funds for self-employed people.
James: A managed fund is a professionally run investment where your money is pooled with other investors and spread across shares, bonds, and property. This diversification across investment classes helps reduce your risk. KiwiSaver is actually a managed fund too.
The difference between KiwiSaver and a managed fund is the accessibility and flexibility. As you said KiwiSaver is locked down (which is a good thing in many ways), mostly until you are retired. Managed funds on the other hand, work in the same way as KiwiSaver, but can be accessed anytime. So, this provides more financial flexibility for business owners because they can have two retirement funds, one that stays locked away no matter what and is provides a good, solid long-term base, and one that can be accessed, if required, in-between.
James: Many managed funds are also taxed the same as KiwiSaver, because they are Portfolio Investment Entities (PIEs), meaning they’re taxed at your Prescribed Investor Rate (PIR), either at 10.5%, 17.5%, or 28%.
James: There are a wide range of fund types to choose from, sector-specific, geographic, or risk-based. There are no restrictions on switching or accessing funds. And you can get started with less than $100. You can choose when to contribute, and how much (again, I suggest automating your contributions for best results.) Velocity can help you choose the right fund based on your goals, risk comfort, and time frame.
Mark is a self-employed business owner in his 40’s with variable income. Here’s how he benefits from using both KiwiSaver and a managed fund:
• Step 1: Secure the Government Boost
Mark contributes $1,042.86 annually to KiwiSaver. That unlocks the $260.72 government contribution, free money that compounds over time. KiwiSaver stays locked in until retirement, giving him a solid long-term base.
• Step 2: Add Flexibility with a Managed Fund
Mark invests $1,000 upfront in a managed fund, then sets up $250 monthly contributions. Unlike KiwiSaver, he can access this money anytime, ideal for unexpected expenses or medium-term goals like upgrading business equipment.
• Step 3: Factor in Timeframes and Fund Types
Because Mark might need to withdraw from his managed fund in 3–5 years, he chooses a balanced fund rather than a high-growth option. For KiwiSaver, he stays in an aggressive fund because his retirement horizon is still over two decades away. Matching fund type to timeframe is critical.
• Step 4: Tax Efficiency
Both investments are PIEs, taxed at Mark’s PIR, making them more efficient than a standard savings account.
• Step 5: Peace of Mind
By splitting his savings, Mark gets the best of both worlds:
✔ KiwiSaver for locked-in retirement security.
✔ Managed fund for flexibility and growth.
✔ Automated contributions so he doesn’t have to think about it.
When income fluctuates, automation keeps you on track.
• Direct credit from your banking app gives you control and flexibility to pause or adjust when needed.
• Start small ($100 or $250 a month) and increase as your business grows.
• Prioritise KiwiSaver to capture the government contribution, then top up with managed funds.
• Talk to James, or one of our financial advisers to check your KiwiSaver settings and get your started in a managed fund.
Bottom line: Retirement planning isn’t about big lump sums; it’s about consistent action. KiwiSaver and managed funds together give you flexibility, tax efficiency, and peace of mind.
Ready to set up a plan that fits your business and lifestyle? Talk to our advisers today.
This article was written by Shona and James.
About James:
Hi, I'm James, a qualified Financial Adviser with Velocity Financial. With an extensive history as a business owner in Wellington's hospitality industry for almost thirty years, I've gained a wealth of experience in how businesses run and what financial support business owners need. My focus is on providing clients with down to earth, practical advice and services they need to thrive financially. The highlight of my work is devising strategies that address the unique financial situations of business owners. Outside the office, I'm a family man with a love for the outdoors, mountain biking, and exploring new local culinary delights. Feel free to connect with me for a genuine conversation about your business and financial future.
Disclaimer: James Henderson (FSP1007200) is a Financial Adviser with Velocity Financial (FSP95466). No financial decision should be taken based on the information in this blog alone. Please see James’ disclosure statement on our website.
Always get professional advice
The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation. As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures https://www.velocityfinancial.co.nz/disclosure-statement.