KiwiSaver continues to evolve, and as we move through 2026 there are several important changes that employees and employers should be aware of. Some of the most significant updates took effect in mid 2025 and are already in place, while further changes are scheduled to roll out over the next two years. Understanding what has changed and what is coming next is important for payroll planning, budgeting and individual financial decisions.
From 1st July 2025, changes were made to the government contribution. The government contribution rate was reduced from 50 cents for every dollar contributed to 25 cents per dollar, halving the maximum annual contribution to $260.72. At the same time, eligibility was tightened so that people earning more than $180,000 per year are no longer entitled to receive the government contribution. One positive change that also took effect from this date was the extension of eligibility to 16 and 17 year olds, meaning younger KiwiSaver members are now able to receive a government contribution for the first time.
Looking ahead, the next major set of changes affects employee and employer contribution rates. From 1st April 2026, the default KiwiSaver contribution rate increases from 3 percent to 3.5 percent for both employees and employers. This increase is intended to gradually lift retirement savings over time, rather than making a sudden jump. In recognition that some people may not be able to absorb the increase immediately, employees can apply to Inland Revenue for a temporary rate reduction, allowing them to remain at the 3 percent contribution rate for a specified period.
Another important change taking effect from 1st April 2026 is the extension of compulsory employer contributions to 16 and 17 year old employees who are KiwiSaver members. Previously, employers were not required to contribute for employees in this age group. This change means employers will need to ensure their payroll systems correctly apply KiwiSaver deductions and employer contributions for younger workers.
A further increase is already scheduled for the future. From 1st April 2028, the default KiwiSaver contribution rate will rise again, this time to 4 percent for both employees and employers. While this is still some time away, it is relevant for long term workforce planning and cost forecasting.
For employees, these changes mean higher minimum KiwiSaver contributions over time, which may slightly reduce take home pay but should result in stronger retirement savings in the long run. The availability of temporary contribution reductions provides flexibility for those who need to manage cash flow in the short term. For employers, the changes mean higher contribution costs, updates to payroll systems, and ensuring compliance with the new requirements, particularly in relation to younger employees.
So what should employers be doing now? First, payroll systems should be reviewed and updated to ensure the 3.5 percent contribution rate is being applied correctly from 1st April 2026, and that employer contributions are being made for 16 and 17 year old KiwiSaver members. It is also important to ensure any employees who have applied for a temporary rate reduction are set up correctly, and that those reductions are monitored so they do not run beyond their approved period.
Employers should also review employment agreements, induction materials and internal policies to ensure KiwiSaver information is accurate and reflects current contribution rates and obligations.
Finally, this is a good opportunity to communicate with employees. Letting staff know what has changed, what their options are, and where they can get further information can help manage expectations and reduce confusion or payroll queries. Looking further ahead, employers may also want to factor the scheduled increase to 4 percent in 2028 into future budgeting and workforce planning.
KiwiSaver remains a core part of the employment relationship in New Zealand. With changes already in effect and more on the way, staying informed and planning ahead will help both employers and employees avoid surprises and ensure ongoing compliance.
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