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New Zealand’s KiwiSaver scheme is set for a significant adjustment on 1 April 2026, with compulsory contribution rates for both employers and employees rising from 3% to 3.5%.
This change forms part of the government’s staged plan to strengthen retirement savings, with a further increase to 4% scheduled for 1 April 2028.
From April 2026, workers contributing at the default rate will see a higher portion of their before-tax income diverted into KiwiSaver. While this increases long-term savings, it also means a small reduction in take-home pay.
Employees who feel the impact may apply for a temporary rate reduction to stay at 3%.
Younger workers will also benefit, in that 16- and 17-year-olds who are members of KiwiSaver will qualify for compulsory employer contributions for the first time.
For businesses, the increase raises overall payroll costs, particularly for workers contributing at the default rate. Employers must ensure payroll systems and budgets are updated ahead of the change.
Particular attention is required by those employers who use the 'total remuneration' approach, i.e., who are bundling the employer contribution into the employee’s overall salary package, rather than paying them on top of it. While lawful, this must be clearly stipulated in the employment agreement. More importantly, leading up to the change in April 2026, employers must check and ensure that the total remuneration approach will not push an employee’s pay below the minimum wage threshold once the increased employer’s KiwiSaver contribution is factored in.
This is especially relevant for lower-paid staff, where even a small shift in how remuneration is structured could inadvertently breach the Minimum Wage Act.
Employers and employees are encouraged to prepare early, meaning:
We can assist with advice, reviews and ensuring appropriate and compliant employment documentation ins in place. Reach out to our employment legal team.
New Zealand’s KiwiSaver scheme is set for a significant adjustment on 1 April 2026, with compulsory contribution rates for both employers and employees rising from 3% to 3.5%.
This change forms part of the government’s staged plan to strengthen retirement savings, with a further increase to 4% scheduled for 1 April 2028.
From April 2026, workers contributing at the default rate will see a higher portion of their before-tax income diverted into KiwiSaver. While this increases long-term savings, it also means a small reduction in take-home pay.
Employees who feel the impact may apply for a temporary rate reduction to stay at 3%.
Younger workers will also benefit, in that 16- and 17-year-olds who are members of KiwiSaver will qualify for compulsory employer contributions for the first time.
For businesses, the increase raises overall payroll costs, particularly for workers contributing at the default rate. Employers must ensure payroll systems and budgets are updated ahead of the change.
Particular attention is required by those employers who use the 'total remuneration' approach, i.e., who are bundling the employer contribution into the employee’s overall salary package, rather than paying them on top of it. While lawful, this must be clearly stipulated in the employment agreement. More importantly, leading up to the change in April 2026, employers must check and ensure that the total remuneration approach will not push an employee’s pay below the minimum wage threshold once the increased employer’s KiwiSaver contribution is factored in.
This is especially relevant for lower-paid staff, where even a small shift in how remuneration is structured could inadvertently breach the Minimum Wage Act.
Employers and employees are encouraged to prepare early, meaning:
We can assist with advice, reviews and ensuring appropriate and compliant employment documentation ins in place. Reach out to our employment legal team.
