Big changes are coming to KiwiSaver, and they’ll affect more than just your retirement savings. Whether you’re a high earner, an employer, or a younger employee, it’s worth understanding how these shifts could impact your cashflow, payroll obligations, and long-term planning.
Here’s what’s changing and how to stay ahead of it.
What’s Changing and When
Over the next few years, KiwiSaver settings are being adjusted in ways that affect both individuals and businesses:
From 1 July 2025:
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The government contribution will drop from 50c to 25c per $1 you contribute.
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The maximum annual government contribution will reduce to $260.72.
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If you earn over $180,000 a year, you’ll no longer be eligible for the government contribution.
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16–17 year olds will now be eligible for the government contribution.
From 1 April 2026:
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Default employee and employer contribution rates will increase from 3% to 3.5%.
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Employees will be able to apply to temporarily stay on 3% if needed.
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Employers must begin contributing for eligible 16–17 year olds.
From 1 April 2028:
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The default contribution rate will rise again to 4%.
These may not sound like dramatic shifts on their own. But they can add up, especially in an environment where wages, compliance costs, and economic pressures are already growing.
What This Means for Employers
For business owners, these changes bring a few new responsibilities and considerations:
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Payroll adjustments: With rising default contribution rates, it’s important your payroll systems are ready. This includes setting up contributions for 16–17 year olds from April 2026.
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Budgeting for increased employer costs: A half-percent rise in employer contributions (and another in 2028) may not break the bank, but across a team, it’s a cost worth forecasting for.
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Communicating with staff: Some team members might not realise these changes are coming. Having open conversations about KiwiSaver contributions and options can help with retention and trust.
You might consider building these increases into your future wage planning or reviewing employee agreements to ensure they reflect the upcoming changes.
What This Means for Individuals
If you’re a high earner or planning your long-term finances:
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Earning over $180k? You’ll lose eligibility for the government contribution from July 2025. That’s a potential $521.43 per year you won’t receive, so it may be worth reviewing how you’re investing and whether KiwiSaver remains the best savings vehicle for you.
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Younger workers benefit: For 16–17 year olds, the ability to receive the government contribution could encourage earlier saving habits. This is a great opportunity to build financial literacy and long-term thinking.
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Increased contributions may affect take-home pay: As the default rate rises to 4% by 2028, employees may want to plan for a gradual decrease in take-home income. This is especially important for those just starting out or living week to week.
A Cashflow and People Strategy, Not Just a Retirement One
These aren’t just compliance tweaks. They’re part of a broader picture. For employers, it’s about staying agile with your people strategy and cashflow planning. For individuals, it’s about understanding where your money is going and whether your current KiwiSaver setup still serves your goals.
Here’s how you might prepare:
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Review your current KiwiSaver contribution settings, both as an employer and individual.
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Factor rising employer contributions into your medium-term budget planning.
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Communicate changes with your team early, so no one is caught off guard.
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If you’re a high earner, talk to your advisor about alternative savings or investment strategies.
Curious How This Applies to Your Business?
Whether you’re updating payroll, planning wages, or just want to understand what this means for your team, let’s talk it through. These changes are manageable with the right strategy in place. If you need to chat contact us.