Are you ready for the 2026 KiwiSaver changes?
Big changes are coming to KiwiSaver, and they’ll affect almost every working New Zealander. If you’re feeling the pinch from the cost of living or your business financials are strained, there’s good news: you have options to ease into these changes. Here’s everything you need to know, explained in plain English.
What's changing and when?
The government has announced a series of KiwiSaver changes rolling out over the next few years. Some have already happened, and others are just around the corner.
Changes that already started
Government contribution cut in half
The government contribution has been reduced from 50 cents to 25 cents for every dollar that employees put into KiwiSaver. This means the maximum annual government top-up has dropped from $521.43 to $260.72.
To get the full government contribution, employees still need to contribute at least $1,042.86 yourself over the year.
New income limit
Employees that earn more than $180,000 per year no longer qualify for the government contribution at all.
Good news for young people
If you’ve got kids who are 16 or 17, they now qualify for government contributions (as long as they meet the other requirements). Previously, they had to be 18 or older.
Get ready for these KiwiSaver changes
Deduction and contribution rates increasing
From 1 April 2026, the default KiwiSaver contribution rate will increase from 3% to 3.5% for employee AND employer contributions. Here’s something you should tell you staff:
- employees who are currently contributing the minimum 3% will automatically move to 3.5% unless they apply for a temporary rate reduction,
- anyone who is paying more than 3% will have no change to their employee contributions, and their employer contributions will increase to 3.5%.
What happens if the first pay on or after 1 April covers time worked in March?
All the websites are silent on this, so you can probably safely assume that whatever pay period the first pay on or after 1 April covers, the deduction and contribution is 3.5% of that whole pay. You won’t need to calculate separately for the portions of pay in March and April.
What this means for your payroll costs
Let’s look at an employee earning $60,000 per year and your employer contribution is at the minimum of 3%. You’re paying $1,800 annually ($34.62 per week) for that employee. When it increases to 3.5%, you’ll be contributing $2,100 annually ($40.38 per week) – that’s an extra $5.76 per week. If your employee is contributing at the minimum 3%, that’s $5.76 extra coming out of their pay.
16 and 17-year-olds will get employer contributions
From 1 April 2026, if you employ 16 or 17 year olds who are contributing to KiwiSaver from their wages, you will need to contribute 3.5%. Previously, employers only had to contribute for employees aged 18 to 65. It appears that you can still stop contributions when an employee turns 65 and continues to work for you (they can still choose to contribute).
Future KiwiSaver changes (2028)
The default rate will increase again to 4% for both employees and employers.
The temporary rate reduction: a brief reprieve?
Here’s the really important part that many people don’t know about – employees don’t have to accept the increase if they can’t afford it right now.
What is the temporary rate reduction?
Starting from 1 February 2026, employees can apply to keep contributing at the current 3% rate instead of moving up to 3.5%. This is not a hardship application – they don’t need to prove financial difficulty or provide any special justification. It’s simply an option available to anyone who wants it.
How long does it last?
Employees can apply for a temporary rate reduction for a minimum of 3 months (92 days) and maximum of 12 months. When the approved reduced contribution period ends, they will automatically go back to the higher rate unless they reapply.
The good news? There’s no limit to how many times an employee can apply for a temporary rate reduction. If you need to stay at 3% for an extended period, you can keep reapplying.
How to apply
Applications open on 1 February 2026. Employees will apply through myIR (Inland Revenue’s online portal). Once approved, they will receive a certificate confirming their temporary rate reduction, which they need to show you, and you must keep it on file with other payroll records.
The reduction won’t take effect until their first payday on or after 1 April 2026, even if they apply and get approved in February or March.
Find out more about temporary rate reductions here.
Important: what about employer contributions?
Here’s something crucial to understand: when an employee reduces their contribution to 3%, your can choose whether to:
- match their 3% contribution (reducing theirs from 3.5% to 3%), OR
- continue contributing 3.5%
Employees are encouraged to think carefully about their deductions and seek independent advice. We’re a fan of www.sorted.govt.nz. Over time, this could significantly impact employees’ retirement savings, so it’s worth thinking carefully about whether they really need the reduction.
What you need to do now
If you employ staff (or even if you’re the only person on payroll), it’s time to start communicating with them. Contact us if you’d like help with that.
Check in with your payroll software provider to find out that there will be an update to your software to ensure you are compliant from day 1.
If you calculate payroll manually, diarise the change so that you’re using the correct calculations.
Here’s your important information:
Timeline for employers
- 1 February 2026: Employees can start applying for temporary rate reductions
- 1 April 2026: New 3.5% rate takes effect; you’ll receive notification from employees or IRD about any rate reductions
- Ongoing: You’ll be notified when employees’ temporary reductions end and need to increase their contributions
Need help with your employment compliance?
Complying with NZ employment law can seem complicated. That’s why we’re here to de-complicate and de-risk employment law compliance for you. Contact us for a no-obligation chat about your HR compliance support needs. Or find out more by clicking one of the buttons below.
This article provides general information about KiwiSaver changes. For advice specific to your personal situation, please consult with a qualified financial advisor.
