A not-for-profit KiwiSaver company says some providers are promising people nearly four times the money they will actually receive when they retire.
Sam Stubbs, from KiwiSaver provider Simplicity, says some KiwiSaver providers are overestimating how much people will receive when they retire. Photo:
Sam Stubbs, from KiwiSaver provider Simplicity, said the average person on KiwiSaver would retire with about $360,000 and should plan accordingly.
However, on some websites they were told they would get upwards of $1.3 million, meaning people would plan their lives differently.
Mr Stubbs warned people using KiwiSaver about unrealstic claims.
"One provider assumed that no tax was ever paid over your lifetime. Well, of course, that's not going to happen; if you're earning money you're going to pay taxes," he said.
"Another one was assuming that after fees and tax you would make 10 per cent returns ... per annum for the rest of your life. We don't know of a period in history where for 45 years you've made that amount of money over that period of time."
Providers needed to be regulated, Mr Stubbs said.
The head of regulation at the Financial Markets Authority, Liam Mason, said any assumption had an element of crystal ball gazing, because no one could say what the market would be like in 40 years.
"The best thing to do with any calculator with these projections is to use it to illustrate the difference for yourself between being in a growth fund, a balanced fund, a conservative fund and think, 'what's the best fund for me to be in at this time in my life?'
"And then, 'what's the best value for money in terms of the fees?'"
However, Mr Mason said it was important not to make it too hard for people to compare the options, and any assumption on returns needed to be reasonable.
The authority is currently investigating whether or not any providers are breaching rules on fair trading.