Changes To KiwiSaver: How To Comply With The New Rules

Major changes to KiwiSaver were announced in Budget 2025. Some of these changes have now come into effect, so it’s important to check that you’re complying with the new rules

Let’s look at what KiwiSaver is and the impact of the recently changed rules.

What is KiwiSaver?

The KiwiSaver voluntary savings scheme is aimed at helping New Zealand workers save for retirement, or buy a first house. But with the rising cost of living, action was needed to make KiwiSaver fit for purpose and more fiscally sustainable as a savings scheme.

Changes to the KiwiSaver rules

 How will the changes to KiwiSaver affect your employees and your small business? Here’s a brief rundown of the changes that are already in effect, those that came into effect in April 2026 and those that will hit in April 2028.

Legislation that’s already in effect:

• If an employee is aged 16 or 17, they qualify for government contributions, so long as they meet other eligibility requirements.

• From 1 July 2025, the government will contribute 25 cents for each dollar your employee contributes to KiwiSaver each year, with the maximum government contribution being $260.72.

• If they earn more than $180,000 of taxable income a year, your employee does not qualify for the government contribution.

Legislation that came into effect in April 2026:

 For employees:

• If an employee is contributing at the default rate of 3%, this will automatically rise to 3.5% for both the employee’s contribution and your employer’s contribution.

• As an employer, you will deduct 3.5% from 1 April (unless your employee applies for a temporary rate reduction).

• The new rate will affect all pay days from 1 April. So even if your employee’s pay period covers before and after 1 April, the whole contribution for that pay period will be deducted at the new rate.

• If an employee is contributing more than 3% already, their contributions will not change. However, if your contribution as an employer is 3%, this will rise to 3.5%.

For employees aged 16 or 17:

• Younger employees will qualify for employer KiwiSaver contributions of 3.5% of their pay from 1 April 2026, so long as they meet other eligibility requirements.

• If an employee is an existing KiwiSaver member, as their employer, you will start making contributions automatically. The employee doesn’t need to do anything.

Temporary rate reduction:

• A temporary rate reduction is available for people who want to carry on contributing at 3% from 1 April 2026.

• Employees can apply for a temporary rate reduction for between 3 and 12 months. Their contributions will be reset to the default rate after 12 months. They can apply for the rate reduction as many times as they like.

• As their employer, you can choose to match their temporary rate reduction. Once they move from the temporary rate to a higher rate, as their employer, you’ll be notified.

If you’re an employer:

You will need to:

• Ensure your payroll settings are updated to apply the default employee and employer contribution rates of 3.5%.

• Make employer contributions for your 16- and 17-year-old employees who are existing KiwiSaver members, or join through a provider.

• Process any temporary rate reduction letters your employees give you.

Legislation that will come into effect in April 2028:

From April 2028, the default KiwiSaver contribution rate will rise again to 4% (from 3.5%) for you and your employees.Helping you comply with the KiwiSaver changes

These amendments to KiwiSaver could have a significant impact for your small business.

Increased employer contributions will increase your payroll costs and stretch your cashflow, as will making contributions for younger workers in the 16 to 17-year-old age bracket.

It’s important for your payroll software and processes to be updated, ensuring that you’re making the correct contributions for the right people, at the right rates.

Come and talk to the Kindred.Co team about complying with the KiwiSaver changes