Changes to KiwiSaver
Learn more about the upcoming changes to KiwiSaver and what we'd suggest to do next.
Contents
Do I have to increase my employer KiwiSaver contributions?
What if an employee chooses to apply for a rate reduction to keep contributions at 3%?
How long are the temporary reduction periods in place for?
How will I know if a temporary rate reduction has come to an end?
How do I apply consistency across all staff, when staff opt for temporary reductions?
Do I now have to make KiwiSaver contributions for 16- and 17-year-olds?
Have Government contribution amounts also changed?
What do I need to do now as an employer?
Overview
The Government has announced a series of changes to KiwiSaver contribution settings. Some changes took effect from 1 July 2025, with further increases scheduled for 1 April 2026 and 1 April 2028. These updates have implications for both employers and employees, particularly in relation to payroll processing and employee communications.
This article outlines what has changed, what is coming, and what employers need to do.
What are the changes?
In 2025 changes to government contributions went live and from 1 April 2026, default employee and employer contributions increase to 3.5%, with this increasing to 4% on 1 April 2028.
From 1 April 2026, for any 16-17 year olds who are employed and contributing to KiwiSaver, employers also have to begin to make employer contributions to KiwiSaver.
From 1 February 2026, employees can apply to IRD for KiwiSaver rate reduction.
For more information about the changes, please see the IRD website.
Do I have to increase my employer KiwiSaver contributions?
Yes. Default employer contributions will rise to:
- 3.5% from 1 April 2026
- 4% from 1 April 2028.
If an employee opts to apply and has confirmed a temporary rate reduction, you can choose to match the lower rate.
What if an employee chooses to apply for a rate reduction to keep contributions at 3%?
They are allowed to do this temporarily, and must apply direct to the IRD from 1 February.
Once confirmed, you will be provided with notice confirming this rate reduction and the period it is related to either by:
- Your employee providing you with a certificate to confirm
- Official communications from IRD
You must ensure that your payroll system is then updated to reflect the rate reduction and the period it is in place for.
How long are the temporary reduction periods in place for?
Temporary rate reductions can be approved for periods of:-
- A minimum of 3 months (92 days), and
- Up to 12 months.
- Employees may reapply if required.
How will I know if a temporary rate reduction has come to an end?
You will be notified when an employee’s temporary rate reduction ends and their contribution rate increases again
If I choose not to match an employee’s KiwiSaver reduction for one employee, can I decide to match a reduction for another?
We wouldn’t recommend this as this could be grounds for unjustified disadvantage. We would recommend being consistent across all staff.
How do I apply consistency across all staff, when staff opt for temporary reductions?
We recommend that you decide from the outset what approach you will take and apply it across the board, by either choosing to continue contributing at 3.5%, even if employees reduce their rate, or opting to match any temporary reduced contributions rates. You should then communicate this to your staff.
If company policy is not to continue to pay the higher KiwiSaver contribution rate, if an employee opts for a reduction, do we have to pass the additional .5% to the employee as salary?
If the employee has been granted a temporary rate reduction you can choose to match their rate or pay the default rate. However, after the temporary rate reduction has lapsed you must pay the default amount.
How will this change impact my staff who I pay Total Remuneration to (meaning that KiwiSaver is inclusive of their pay)?
Technically if the KiwiSaver rate is increasing, this will impact their take home pay and so you would need to either consider increasing their total remuneration amount or consult with them regarding the reduced take home pay amount. We would recommend getting in touch us regarding your options.
Do I now have to make KiwiSaver contributions for 16- and 17-year-olds?
Yes. From 1 April 2026, if a 16 or 17 year old employee is contributing to KiwiSaver, you must begin making employer contributions for them.
Have Government contribution amounts also changed?
Yes, from 1 July The Government contribution reduced from 50 cents to 25 cents for every dollar an employee contributes.What do I need to do now as an employer?
- Ensure ongoing compliance with the announced changes as they come into effect.
- Communicate clearly with employees so they understand:
- How contribution rates are changing, and
- What options may be available to them.
- Use the platform’s custom reminders function to notify employees. More information on content and instructions can be found here.
- Review your payroll systems to ensure they are ready for:
- Contribution rate increases,
- Ability to have different contribution rates, and
- Temporary rate reductions from April 2026.
- Most standard MyHR employment agreements do not specify KiwiSaver contribution rates, so updates will generally not be required.
- If you use alternative agreement templates that specify rates, you may need to review and amend these.
- Be prepared to respond to employee questions, particularly around:
- Government contribution changes, and
- The option to apply for a temporary rate reduction.
- Reduce an employee’s KiwiSaver rate if:
- The employee provides you with a certificate confirming the reduction and period it applies for
- You receive a letter from the IRD confirming the employee has a rate deduction and the period it is for
Support Options
If you need more help, our HR teams are always here for you!
If you have questions, message the MyHR team via the Ask Us chat feature or call us on:
NZ - 0800 69 47 69 (0800 MY HR NZ) or +64 9 887 3345
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