New Zealanders are being too passive about their potential KiwiSaver earnings.

LISTEN ABOVE: John Kensington, head of Financial Services at KPMG joins Rachel Smalley on KPMG Early Edition to discuss our KiwiSaver habits.

That's the finding included in just released KPMG’s new Funds Management Industry Update.

It said there's an unnecessarily high concentration of KiwiSaver investment within conservative funds.

That's mostly due to savers who default into a scheme rather than choosing their level of risk.

The analysis believes this is a major flaw.

It said in Australia, most default funds are in the growth or aggressive categories, which is far better aligned with the long time horizon of investing for retirement.

KPMG’s Head of Financial Services, John Kensington said New Zealanders need to take a closer look at their potential KiwiSaver growth.

He said in recent times, a growth fund can deliver double-figure rates of return, compared to a cash fund at around two to three percent.