Is war funding your retirement? In our recent discussion with Lily Richards, Chief Marketing and Client Officer at Pathfinder KiwiSaver Plan, James and Mike explored why thousands of New Zealanders may unknowingly have exposure to weapons companies through their KiwiSaver. They explain why knowing what you're invested in matters just as much as the returns your fund delivers.
Is War Funding Your Retirement? Most Kiwis Don't Know
Around $392 million is invested in weapons through KiwiSaver funds a figure that has increased by around 40% over the past year. For many investors, the bigger question isn’t whether that’s right or wrong – it’s whether they even know their KiwiSaver has exposure in the first place. James believes understanding what’s inside your fund is the first step before deciding whether any changes are needed.
According to Lily Richards, Chief Marketing and Client Officer at Pathfinder KiwiSaver Plan, many investors simply don’t realise they have exposure to weapons companies. She explains that the 40% increase doesn’t necessarily mean KiwiSaver providers have deliberately invested more in weapons companies. Rising share prices, index rebalancing and active investment decisions can all contribute to higher exposure. That’s why, she says, it’s important for investors to understand what’s inside their KiwiSaver and whether those investments align with their own values.
Is War Funding Your Retirement? Here's How to Find Out
If you’ve never looked inside your KiwiSaver, you’re not alone.
Lily recommends using the Mindful Money website, a New Zealand charity that allows investors to search their KiwiSaver provider and see exactly what companies they’re invested in. Thanks to New Zealand’s disclosure rules, fund managers publish their holdings, allowing Mindful Money to categorise investments, including exposure to weapons, environmental concerns and animal welfare issues.
The tool also allows investors to drill deeper into individual companies and understand why they have been flagged, helping people make more informed decisions about whether their investments reflect what matters to them.
Ethical, Responsible or Sustainable? They're Not Always the Same
One of the biggest misconceptions discussed throughout the episode is that terms like ethical, responsible and sustainable all mean the same thing.
According to Lily, there is currently no standard definition in New Zealand. Each fund manager can define these terms differently.
That means two KiwiSaver providers may both describe themselves as ethical while applying completely different investment criteria.
Rather than relying on marketing language, Lily encourages investors to understand how each provider defines its investment philosophy and whether that matches their own values.
Why Some Funds Have More Weapons Exposure Than Others
Lily explains that different investment styles can naturally lead to different levels of exposure.
Passive index funds generally mirror the underlying market. If defence companies increase in value or make up a larger portion of an index, those funds may automatically increase their exposure.
Active fund managers may also increase exposure if they believe defence companies present attractive investment opportunities, provided they don’t have ethical screening policies preventing those investments.
James notes that the increase in weapons exposure across KiwiSaver funds doesn’t necessarily mean providers have deliberately purchased more weapons companies. Some of the increase may simply reflect higher share prices, while some could result from index changes or active investment decisions.
Returns Aren't the Only Thing That Matters
A common assumption is that investors must choose between strong returns and investing according to their values.
Lily says that isn’t necessarily the case.
She explains that, over the long term, ethically invested funds have generally remained competitive with broader market returns. Looking after your values doesn’t automatically mean sacrificing investment performance.
She also points out that returns should always be considered after fees, rather than simply comparing headline performance.
For long-term investments like KiwiSaver, both financial outcomes and personal values deserve consideration.
Why More Kiwis Are Asking Questions
According to Pathfinder’s research, younger investors are becoming increasingly interested in where their money is invested.
Lily believes many younger New Zealanders naturally connect money with broader social outcomes rather than viewing them as separate issues.
At the same time, she says more people believe they’re already investing ethically, even though many have never actually checked their KiwiSaver holdings.
James observes that many everyday New Zealanders are focused on simply getting ahead financially, particularly with ongoing cost of living pressures. However, Lily argues there are now investment options that allow people to pursue competitive long-term returns while still investing in line with their values.
Should You Change Your KiwiSaver?
At its core, the episode encourages listeners to make an informed decision.
For some investors, exposure to weapons companies may not be a concern.
For others, it may be a determining factor when choosing a KiwiSaver provider.
Lily suggests starting by understanding what matters most to you, checking your current investments and, if necessary, speaking with a financial adviser about whether another fund may be a better fit.
The goal isn’t to tell investors what to believe. It’s to ensure they understand how their retirement savings are invested before deciding whether they’re comfortable with it.
Key Takeaways
- Many KiwiSaver funds have exposure to weapons companies, but many investors don’t realise it.
- The Mindful Money website allows New Zealanders to check what’s inside their KiwiSaver.
- Terms like ethical, responsible and sustainable can mean different things depending on the provider.
- Passive and active funds can both have exposure to defence companies for different reasons.
- Ethical investing doesn’t necessarily mean sacrificing long-term investment returns.
- Younger investors are increasingly interested in ensuring their investments align with their values.
- The most important step is understanding how your KiwiSaver is invested before deciding whether it reflects what’s important to you.
Next steps:
If you’d like to review whether your KiwiSaver aligns with your financial goals and personal values, speak with the Lighthouse Financial wealth team, or learn more about Pathfinder’s approach to ethical investing here.
If you’d like to watch more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
