Regs:

Linuxluver:
The only issue I have with Kiwisaver is it goes to fund managers who then put it in the share market....and I;ve learned several times over past 30 years that the share market is mug's game unless you pick the winners precisely....and fund managers do a lousy job of that. My AMP super fund is still worth less than it was 3 years ago. 

for the risk-adverse, you can opt for a "Cash" investment fund instead. Those are not invested in the sharemarket and basically deliver the same as a bank deposit (less the management fees, of course).  My parents were both close to 65 when they started kiwisaver so i ensured that they enrolled in case funds.

for the 'younger' people - people who are expecting to be around for another 30+ years before they draw on kiwisaver - the managed funds with shares are not so bad as the sharemarket still tends to rise in the long term.  if you go for the higher risk funds - the growth funds - you might find some pretty decent gains after several years. 

as has been illustrated over the recession and financial crises though, shares can have big downward movements.  some of the funds that started as $1 per unit dropped well under that.  if you were in  it for the short term, well - sucks to be you!  for those of use in it for longer, sure some unitslost value for a couple of years.  while they were low, we were also buying units for less than $1.  now those units we bought for less than $1 are worth over $1... which represents some pretty decent gains.  Also, while the units were less than $1 we bought more of them as we were still investing the same amount.

my fund - fisher funds, which is a growth fund - has had 15% growth over the last two years and has a 3% growth since the fund launched.  during the worst of it in nov/dec 08, each $1 unit was worth less than 70c i think.  i'm not sure what the current balance is, but i'm usually pretty happy when i see it given that i would have nothing saved otherwise..