Get ready for KiwiSaver Changes

KiwiSaver is an essential component of retirement planning for New Zealanders, and the recent changes to this program could significantly impact both employees and employers.  As a key part of your business preparations, it's crucial to stay informed about these changes to ensure compliance and maximize retirement benefits for your employees. 

Overview of KiwiSaver

KiwiSaver is a voluntary, government-supported savings scheme designed to help New Zealanders save for retirement.  Both employees and employers contribute to these savings, with employees often choosing a percentage of their pay to invest.  Employers must also contribute a minimum of 3% of the employee's gross salary.

Employee and employer minimum contributions to KiwiSaver will move to 3.5% from 1^st April 2026 and then to 4% from 1 April 2028.  Once your employee moved to a higher contribution rate you will need to increase your employer contribution rates – Inland Revenue will advise you if these increases happen.  Members will be able to apply for a temporary rate reduction from 1^st February 2026 if they wish to continue contributing at 3% from 1^st April 2026. 

Alongside these changes, from 1st July 2025, the Government contribution is decreasing to 25% (i.e. 25 cents for every $1 contributed to a maximum of $260.72).  Contributions have been removed for people earning over $180,000.00 of taxable income in a year.

People aged 16 & 17 will qualify for Government contributions as long as they meet other eligibility requirements.

Action Steps for Employers:

·         Stay Informed: Regularly check updates from the Inland Revenue Department (IRD) and consult with financial advisors to remain compliant with the latest regulations.

·         Communicate with Employees: Provide clear communication about how changes will impact them and offer assistance in understanding these changes.

·         Review Payroll Systems: Ensure your payroll system is updated to process new contribution rates and tax adjustments accurately.

·         Encourage Financial Education: Offer resources or workshops to help employees make informed decisions about their KiwiSaver investments.

Equip your business and your employees with the knowledge and strategies necessary to adapt to these KiwiSaver changes.  By being proactive, you can ensure a smoother transition and reinforce your commitment to supporting your employees’ financial well-being.

Disclaimer: This article provides general information only.  For advice related to your specific circumstances, please consult with a professional advisor.