KiwiSaver Basics and upcoming changes

KiwiSaver: 2026 Guide and Changes

KiwiSaver is a voluntary savings scheme designed to help New Zealanders fund their retirement or purchase their first home. It relies on contributions from three sources: employees, employers, and the government.

The Basics

• Employee Contributions: Deducted from your before-tax pay at a rate of 3%, 4%, 6%, 8%, or 10%.

• Employer Contributions: If you contribute from your salary, your employer must also contribute a percentage of your gross pay (provided you are eligible).

• Government Contributions: An annual credit added to your account by the government, based on your own contributions during the year (1 July to 30 June).

• Withdrawal Options: Generally, withdrawals are limited to first home purchase or once you reach retirement age at 65. There are a few early withdrawal options such as financial hardship, permanent emigration, or serious illness, however.

Key Changes from 1 April 2026

Significant updates to contribution rates and eligibility take effect on 1 April 2026.

1. Default Contribution Rate Increase The minimum contribution rate for both employees and employers increases from 3% to 3.5%.

• If you are on 3%: Your rate will automatically increase to 3.5% on 1 April.

• If you are on 4% or higher: Your rate remains unchanged.

2. Inclusion of 16 and 17-Year-Olds Employees aged 16 and 17 are now eligible for mandatory employer contributions of 3.5%. This allows younger workers to begin building their savings balance earlier.

3. Government Contribution Adjustments The annual government "top-up" has been recalibrated:

• The Match: The government now contributes 25 cents for every $1 you contribute (previously 50 cents).

• The Cap: The maximum annual government contribution is $260.72.

• Requirement: To receive the full $260.72, you must contribute at least $1,042.86 annually.

• Income Limit: Individuals earning a taxable income of $180,000 or more are no longer eligible for this contribution.

Managing Your Contributions

If the increase to 3.5% is not currently affordable, you can manage your settings via MyIR:

• Rate Reduction: You can apply for a "Temporary Rate Reduction" to stay at 3% for 3 to 12 months.

• Employer Match: Note that if you reduce your rate to 3%, your employer is only required to match that 3%.

Future Outlook

These changes are part of a phased increase. The default contribution rate is scheduled to rise again to 4% on 1 April 2028.