New year, new KiwiSaver rules, same you

By Amy Sexton & Robyn Walker

Budget 2025 introduced a series of KiwiSaver changes that will impact the nearly 3.5 million New Zealanders with KiwiSaver accounts. These changes take effect between 1 July 2025 and 1 April 2028. One of the major adjustments, an increase in the default employer and employee contribution rates, begins shortly. It is therefore timely to remind both employees and employers of the upcoming changes.

Default employer and employee contribution rates

The Government is increasing the default KiwiSaver contribution rates from the current 3% to an eventual 4% (for both employee and employer contributions) phased in from 1 April 2026 to 1 April 2028.

Considerations for employees

Do I have to pay the increased rate?

An increased rate of contributions means a smaller net pay packet. Some people may have tight budgets meaning there is no flex for increased contributions. If you don’t want to increase contributions it’s been possible to apply for a temporary rate reduction from 1 February 2026. This allows you to continue to contribute at the 3% rate when the default rate increases on 1 April 2026. A temporary rate reduction can be for a set period of 3 to 12 months and can be renewed as often as needed.

If I have a temporary rate reduction, what rate does my employer pay?

Your employer can choose to pay the new default rate of 3.5% or match your temporarily reduced rate of 3%.

How do I apply for a temporary rate reduction?

Applications are submitted to Inland Revenue through the KiwiSaver account panel in myIR, using the KiwiSaver temporary rate reduction option. Once processed, Inland Revenue will issue a letter showing the start and end dates of the reduction. You must provide this to your employer and any future employers during the reduction period.

Considerations for employers

Employers should ensure payroll systems are updated to apply the new default rate from 1 April 2026. Processes must also be in place to correctly apply deductions for employees with approved temporary rate reductions. Employers should determine whether they will continue to contribute at the higher default rate for employees who have reduced their own contribution.

Contributions for 16 and 17-year olds

Also taking effect from 1 April 2026 is the extension of compulsory employer KiwiSaver contributions to eligible 16 and 17-year olds. Previously employer contributions were only compulsory for those aged 18 and 65. If your kids are working, this is an appropriate time to discuss whether they should join KiwiSaver to access employer and Government contributions (see below).

Government KiwiSaver contributions

From 1 July 2025, the Government contribution reduced from 50 cents to 25 cents for each dollar contributed. The maximum annual contribution therefore halves from $521.43 to $260.72. Individuals earning more than $180,000 of taxable income each year will no longer qualify.

The positive change is that 16 and 17‑year‑olds will now be eligible for the Government contribution.

If you have questions about the employer or tax implications of KiwiSaver, please contact your usual Deloitte adviser. Deloitte does not provide financial advice, so questions relating to KiwiSaver investment choices should be directed to an independent financial adviser.