The Retirement Commission has welcomed several of the Government’s KiwiSaver changes announced in Budget 2025, stating that early estimates suggest many New Zealanders could end up with more money saved for retirement.
The changes include a gradual increase in contribution rates, a reduction in government contributions, and expanded eligibility for younger members. With around 3.4 million KiwiSaver members, and 2.2 million receiving some form of employer or government contribution in 2024, the impact is expected to be widespread.
Contribution rates to rise
From 1 April 2026, employee and employer contribution rates will increase from 3% to 3.5%, rising again to 4% from 1 April 2028. These changes are designed to help New Zealanders build more substantial retirement savings over time.
A new temporary savings reduction will also be introduced. This allows members to reduce their contribution rate to 3% for up to 12 months at a time, with employers able to match at that lower rate. Members will be able to apply for multiple temporary reductions.
Changes to government contributions
From 1 July 2025, the government contribution will be reduced to 25 cents for every $1 contributed, up to a maximum of $260.72 per year. People earning more than $180,000 per year will no longer be eligible for this contribution.
While these changes may support overall savings growth, Retirement Commissioner Jane Wrightson notes they may not benefit everyone equally. “The reduction in the government contribution will hit low-income earners, Māori, women, and the self-employed the hardest.”
Expanded access for younger savers
From 1 July 2025, 16- and 17-year-olds will be eligible for government contributions if they contribute. And from 1 April 2026, employer contributions will apply to this age group as well. While these members will not be automatically enrolled, they can opt in to receive the benefits.
Focus on equity in retirement outcomes
In March, the Retirement Commission reported a 25% gender gap in average KiwiSaver balances, with men saving significantly more than women. While the contribution increases are expected to lift savings overall, Wrightson says, “It’s a shame there are so few government incentives for a scheme that underpins private saving for retirement.”
She also expressed concern about how employer contributions are applied. “We hope employers respect the spirit of the changes… rather than including them as part of total remuneration — which should be banned.”
The Retirement Commission will continue to assess the impact of these changes through the 2025 Review of Retirement Income Policies (RRIP), due for completion in December.
Curious how the changes could impact your savings?
Use the updated Sorted KiwiSaver Calculator to see what your future balance could look like. And if you’d like help understanding what it means for you, get in touch for personalised advice.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.