Average KiwiSaver balance cracks $40k

New Zealanders' average KiwiSaver balance has ticked over $40,000 for the first time, but there are still more than a million members not contributing to the scheme at all.The Financial Markets Authority has released its latest KiwiSaver report, which shows there were 3.4 million members in the year to March, with an average balance of $40,340.FMA head of investment management Emelie Jensert said that was a milestone for the scheme, but it came with responsibilities for providers and members."As average balances, as well as the overall balance, goes up, what we expect from providers is that they have good governance, they have clear disclosures and the members understand what they are getting out of KiwiSaver."I think the flip side of that is it also puts responsibility on KiwiSaver members to make sure that they engage in a way that's appropriate for them and their own financial circumstances."There was a total of $138.8 billion in KiwiSaver funds under management, an amount that has more than doubled since 2020.There was $13.2b contributed to the scheme in the year, a record level, and $10.7b was made in investment returns. But 1.4 million members were not contributing regularly."I think it's important to notice it includes a very wide range of individuals," Jensert said."It includes people who are under 18, it includes people who are retiring. So now more people are starting to age out of KiwiSaver and retire ... it includes people who are parenting, potentially on parental leave, people who are outside paid work. It doesn't necessarily reflect people who have stopped saving by choice. We do continue to encourage members to review whether contributions are the right thing for them to do at this point in time, for them."Members withdrew $6.8b, including at 65, for first homes and hardship, as well as other reasons.Withdrawals by members 65 and over increased 10.5 percent to $3.3b, almost half the withdrawals in the year.But the number of members making a full withdrawal continues to fall, which the FMA said suggested more people were choosing to keep some or all of their savings invested.The $531.5 million withdrawn for hardship reasons was up 19.8 percent year-on-year and first-home withdrawals hit record levels. More than 50,.000 people withdrew a combined $2.2b.Members paid a total of $978.2 million in fees, up 12.6 percent from the year before."The fees as a proportion of the funds that are in the KiwiSaver system have stayed the same for the past three years," Jensert said."What the FMA will be doing for the year ahead is we will conduct some research into KiwiSaver provider fees and particularly around trends. Once we've conducted that work, we will then see what the next steps could potentially be."Jensert the number of members switching between funds increased and the transfer volume between providers reached new highs.Growth funds attracted the largest number of incoming switches, but cash and conservative funds recorded the largest net inflows by value, while balanced and growth funds experienced net outflows.Jensert said there were three things she would encourage people to do. "The first one being review whether you're contributing or not and if the contribution rate is the right one for you. The second one being are you in the right fund? That might change over your lifetime and depending on your financial circumstances. And the third one being are you understanding the fees that are being charged and what you are getting back in return for those fees? And is the provider that you're with the right one for you individually?"Commerce and Consumer Affairs Minister Cameron Brewer welcomed the report."Competition is a key focus for this Government, and this report shows it working. Members switched funds 460,000 times last year and $7.4 billion moved between providers, up from $5.5 billion. If your provider isn't delivering, you can move, and hundreds of thousands of Kiwis did exactly that," he said."Check what fund you're in, check what you're paying, and don't be afraid to shop around. This Government's job is to keep that market competitive and well regulated so Kiwis have real choices."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money.