KiwiSaver providers will have to justify the swelling size of the fees they charge investors, as the financial regulator cracks down.
The Financial Markets Authority's (FMA's) annual review of KiwiSaver found providers collected 15 percent more in fees in the year ended March, totalling $480 million.
FMA head of regulation Liam Mason said the FMA was concerned about a lack of reduction in fees, so it would act.
"Over the coming year, we will be asking KiwiSaver providers to demonstrate how they are providing value for money for members.
This includes explaining investment styles and how higher fees are justified for services such as active fund management or responsible investment strategies.
"We are concerned that the benefits of scale, at least for the larger providers, are not being passed on to investors," Mr Mason said.
An independent report commissioned by the FMA, found fees were higher than a similar retirement saving scheme in the United Kingdom.
"[This] warrants further investigation to better understand this outcome and ... attempt to understand the drivers of the difference," the report by consulting firm Melville Jessup Weaver says.
Meanwhile, the number of people contributing to KiwiSaver rose 3 percent in the year to 2.9m, increasing total funds by 17 percent to $57 billion.
Higher returns contributed to growth, offsetting record withdrawals from retirees.
The amount withdrawn by first home buyers also increased, as did the number pulling their funds for hardship reasons.