The Investment Savings and Insurance Association is backing calls to change the KiwiSaver default investment fund.
The country's largest KiwiSaver funds manager, ANZ, wants the government to change the default option from conservative to a growth-orientated strategy, which it says would give investors more money when they retire.
Under KiwiSaver rules, people who do not specify where their savings should be put are enrolled automatically into so-called conservative schemes with low risk but low growth rates.
ANZ says an estimated 190,000 people are getting far less in their accounts than they could - which it calls a ticking time bomb.
It says that under current default settings, tens of thousands of New Zealanders face a $72,000 shortfall when they turn 65, amounting to a $14 billion shortfall for savers.
ISI chief executive Peter Neilson also says the government needs to change the rules.
"A surprisingly high proportion of people who went into a default scheme have actually stayed there.
"People have great difficulty explaining what alternatives are available and also taking long term views on what their investment strategy should be."
He says most people are not sophisticated enough in terms of making complex decisions on exactly where to put their money.