The Government’s latest Budget introduced some major changes to KiwiSaver aimed at helping New Zealanders grow their retirement savings, while also reducing the fiscal cost of the scheme. With updates to contribution rates, government incentives, and eligibility rules, these adjustments will impact millions of New Zealanders saving for their future.

Key Changes to KiwiSaver

1. Increased Contribution Rates
   From 1 April 2026, both employee and employer default contribution rates will rise from 3% to 3.5%, then increase again to 4% by April 2028. If needed, you’ll still be able to opt down to 3% for up to 12 months, and your employer will match that rate during that time.
2. Reduced Government Contributions
   From 1 July 2025, the Government’s annual contribution will be halved (dropping from 50 cents to 25 cents for every dollar members contribute) with the maximum annual government contribution now totalling $260.72. Plus, Kiwis earning more than $180,000 per year will no longer be eligible for any government contribution.
3. Inclusion of Younger Members
   Under the latest changes, young people will benefit more. From 1 July 2025, 16- and 17-year-olds will become eligible for government contributions, and from 1 April 2026, employers will also be required to make matching KiwiSaver contributions for employees in this age group. This is great for younger Kiwis wanting to build up funds to put towards their first home or who are keen to jump-start their retirement savings early!

What It Means for Retirement Outcomes

According to modelling from the Retirement Commission, a median income earner aged 18 who consistently contributes to KiwiSaver under the new settings could see their retirement savings last 30% longer. For example, someone earning $48,000 and investing in a balanced fund could accumulate nearly $900,000 by age 65 – up from around $721,000 under the previous structure.

Carl Pheasant, Threefold’s Director of Wealth, says the changes are largely positive – but with a few things to watch out for…

“The phased increase in contribution rates is a positive move, encouraging both employees and employers to invest more in retirement savings. At the same time, the drop in government contributions may offset some of these benefits and make it harder for lower earners to build momentum in the early stages of their savings journey.”

He also supports the move to bring younger people into the scheme:

“It’s great to see the government recognising the value of starting early. Including 16- and 17-year-olds means we can help build strong financial habits before many young people even enter full-time work. Starting early also helps give younger Kiwis a real head start, not just for retirement, but also when it comes to saving for their first homes.”

What Should You Do?

For many New Zealanders, these changes present both opportunities and risks. Higher contributions can significantly boost long-term outcomes, but the loss of government support, especially for those on lower incomes, means it’s more important than ever to have the right fund and contribution strategy in place.

If you’re unsure how these changes might affect your retirement goals, our team is here to help. Book a free KiwiSaver review with one of our advisers and ensure you’re making the most of every dollar you contribute.

And… if you book a KiwiSaver review this month, you’ll go in the draw to win a month’s mortgage repayments on us (up to the value of $5,000). To book your review, click here.

The content of this article should not be taken as financial advice or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.