The country's largest KiwiSaver provider is lobbying for a change to the rules around default funds so that they are managed with a "life stages" strategy, meaning members have their fund allocation adjusted according to how far they are from retirement age.

Currently default funds are required to have conservative investment mandates, with a large chunk of the funds held in cash.

However, new research by ANZ Wealth and OnePath estimates that under the current default settings nearly 200,000 young New Zealanders could face a shortfall of $72,000 when they retire.

This shortfall represents the difference in median expected outcome between the current default settings ($248,000) and ANZ's proposed "life stages" strategy ($320,000), based on an investor who joins KiwiSaver at age 25 with an annual income of $36,000.

According to ANZ's proposal, members aged up to 35 would be allocated to growth funds, then from 36 to 45 they would be put in a balanced growth fund, from 46-55 they would move to a balanced fund, 56-60 a conservative balanced fund, 61-64 a conservative fund and from 65 a cash fund.

However, ANZ Wealth general manager of investment Simon Botherway acknowledged that even with these settings, investors could be missing out on returns by being moved out of growth funds 30 years before they are able to actually withdraw their money.

"What we are proposing is still quite conservative, but it is a lot better than the current default scheme settings."

ANZ Wealth managing director John Body said the people in question didn't have access to financial advice.

"The adviser community services a different part of the market, people that can pay for advice.  We can't really expect the adviser community to provide advice to people who have just started in KiwiSaver and have $3000 to $5000 in their accounts."

Body said the ANZ and National Bank KiwiSaver schemes already use the life stages investment fund selection for people who do not select their own fund, and said several other default providers did this as well.

However, this is prohibited for default funds.