The average balance of $11,000 last year had grown to $13,000 this year and would grow markedly from now, he said in an interview.
The balance growth was less than expected but was explained by nearly half of account holders not currently contributing: mostly children and those who had retired but were keeping their funds invested, combined with a few still working but on a contribution holiday.
The average balance of those regularly contributing was $19,000, he said.
"People have started to achieve significant balances, balances large enough to capture their attention. We are seeing that from people switching providers."
Separately, the Financial Markets Authority said in its KiwiSaver annual report that for the first time, the level of people transferring between schemes was higher than people joining KiwiSaver.
In the 12 months to March 2016, 175,000 members transferred to a different KiwiSaver provider.
This compared to 177,000 people switching schemes in the year to March 2015.
In the year to March 2016, 145,000 new members joined KiwiSaver, compared to 245,000 new members the year before.
That represented the lowest level of growth since reporting began in 2012, the FMA said.
"The number of [members in default schemes] continues to decline from its peak of 465,000 in 2013 to 445,000 in 2016, now representing 17% of the total members," the FMA said.
Mr Foster said it was no surprise the level of growth in new members had started to flatten out.
Most people who wanted to join had already joined. About 2.6million had joined KiwiSaver.
There continued to be a "trickle" of people enrolling when they started new jobs.
People who opted out were not likely to join any time soon, as KiwiSaver was not compulsory.
The $1000 incentive to join KiwiSaver had been removed, making it less attractive for someone under 18 to join the scheme, he said.
That had also meant fewer people signing up babies to the scheme.
Mr Foster welcomed the move to make fees charged by KiwiSaver providers more transparent to investors.
The Ministry of Business, Innovation and Employment, with the Commission for Financial Capability and the FMA, was currently reviewing the content of the annual statements KiwiSaver schemes must provide to their investors.
Forsyth Barr, along with other scheme providers, had already adopted a more transparent way of expressing fees and others would follow, he said.
Those in the finance sector would understand the jargon, such as account fees, management fees, scheme expenses, transfer fees and transactional costs.
But it was in the best interests of investors to provide a simple explanation of what they were paying for and include all fees into one heading.
Commerce Minister Paul Goldsmith said consultation with KiwiSaver scheme providers had started to ensure fee transparency was done in a way that was simple for the consumer to understand and easy for providers to implement.
It was his expectation any regulatory change required would be in place for the next annual statements and KiwiSaver providers would already be working towards providing their members with the total fees they were paying.
Mr Foster said KiwiSaver was moving towards its third stage of development and was likely to eventually follow the Australian mode.
The first phase was people realising KiwiSaver was an easy way to save towards retirement.
The second stage was savers seeing their balances start to grow to a significant value and wanting to understand more how their money was handled.
Now, in the third stage, savers were asking for more advice on where their investments should be placed, resulting in people transferring schemes.
"In terms of transfers, about 175,000 people transferred providers over the past 12 months, representing a staggering $2billion. About 30,000 of those people were in default funds."
More New Zealanders were also using their KiwiSaver funds for first home purchases, he said.
Last year, first home withdrawals reached $500million, more than double the number from the previous year and a key trend.
Eventually, Mr Foster believed KiwiSaver would become compulsory and New Zealand would move closer to the Australian model, where investors could self-manage their superannuation schemes.
"That is a major part of the Australian industry. We are a long way from that here but it must come in once there is an extra zero at the end of the investment balance."
