KiwiSaver is Changing: What NZ Employers Need to Budget For

Inland Revenue says employees who were contributing at the 3% default automatically moved to 3.5%, and their matching employer contribution also moved to 3.5%. The new rate applies to pay days from 1 April 2026.

Employees who were already contributing more than 3% did not have their own rate changed automatically. If their employer was contributing 3%, however, the employer contribution generally increased to 3.5%.

The 2026 change also extended compulsory employer contributions to qualifying 16- and 17-year-old KiwiSaver members. Employers should apply all current eligibility requirements, not age alone.

Inland Revenue says the default employee and matching employer rates will rise from 3.5% to 4% on 1 April 2028.

That scheduled date belongs in payroll planning, remuneration forecasts and employee communications. Employers should recheck Inland Revenue guidance before changing payroll because later policy or legislation could alter the settings.

An employee can apply to Inland Revenue for a temporary rate reduction lasting from 3 to 12 months. The employee must give the employer the acceptance letter showing the applicable dates.

The employer can choose whether to reduce its own contribution to 3% during that period. When the temporary reduction ends, Inland Revenue says the employee deductions return to the 3.5% default unless another reduction has been approved.

Communications should therefore distinguish the default rate from an approved temporary rate. A blanket statement that every employee and employer must contribute exactly 3.5% can be misleading.

For an employee who moved from 3% to 3.5%, the additional deduction is 0.5% of gross pay. For example, 0.5% of $70,000 is $350 over a full year, before allowing for pay timing or any change in earnings. This is an illustration, not a personalised pay calculation.

The employer’s gross compulsory contribution also moved from 3% to 3.5% in the usual case. The amount credited to the member is lower than the gross employer contribution where ESCT is deducted.

Total remuneration arrangements need their own agreement and payroll review. Inland Revenue says a compulsory employer contribution may be included in an agreed salary package, but minimum wage must be met excluding that contribution.

From 1 July 2025, an eligible member can receive 25 cents from the Government for each dollar they contribute during the KiwiSaver year, up to $260.72. The member needs to contribute at least $1,042.86 of their own money between 1 July and 30 June to receive the maximum.

Inland Revenue says employer contributions do not count toward the $1,042.86 threshold. Age, membership-period and taxable-income conditions can also affect eligibility or the amount paid.

Confirm payroll is using the current employee and employer rates, and retain each temporary-rate acceptance letter with its start and end dates.

Check employees aged 16 and 17 against the current employer-contribution eligibility rules. Review ESCT treatment and any total remuneration wording with the appropriate payroll, tax or employment specialist.

Tell employees which parts are automatic payroll settings and which choices require them to contact Inland Revenue or their KiwiSaver provider. Avoid recommending a personal contribution rate, fund or investment decision.

Inland Revenue — KiwiSaver changes, updated 19 March 2026, including the 1 April 2026 and 1 April 2028 rate changes, qualifying 16- and 17-year-olds and government-contribution changes.

Inland Revenue — Employer contributions to KiwiSaver schemes and complying funds, including the current compulsory minimum, temporary-rate matching and total-remuneration treatment.

Inland Revenue — Temporary rate reduction, including the application period, notice and return to the default rate.

Inland Revenue — Getting the KiwiSaver government contribution, including the 25-cent rate, $260.72 maximum and $1,042.86 member-contribution threshold. Sources accessed 29 July 2026.