What’s Changing?
The government has announced that starting from 1 April 2026, the default KiwiSaver contribution rate for both employees and employers will increase from 3% to 3.5% of gross pay. Then, on 1 April 2028, this rate will rise again to 4%.
These changes are part of Budget 2025’s efforts to help Kiwis build stronger long-term savings for retirement.
If you wish to continue contributing at 3% from 1 April 2026, you’ll be able to apply for a temporary rate reduction starting from 1 February 2026. This may apply if the increased rate is unaffordable for you or if you prefer to save through other means.
You can request a temporary reduction for a period between 3 months and 12 months, and you may apply multiple times if needed.
Your employer has the option to match your reduced contribution rate. Once you return to a higher rate, your employer will be notified.
How Much Difference Could It Make?
New analysis by the Retirement Commission shows that moving from a 3% to 4% KiwiSaver contribution rate can significantly boost long-term savings.
Here are some modelled scenarios:
- A 35-year-old earning $80,000 would have a 25% higher KiwiSaver balance at age 65 under the new settings compared to the current 3% contribution rate.
- A 35-year-old earning $200,000, joining KiwiSaver from 2025, could expect a 27% higher balance at retirement.
- A 16-year-old earning $30,000 who begins contributing at age 18 would see about 26% more savings by age 65 under the new settings, versus 22% if they were already contributing.
These increases are driven by higher employee and employer contributions, which together outweigh the reduction in the government’s annual contribution. Over time, the impact of this higher compounding base is substantial.
Source: Retirement Commission, July 2025
What Should You Do?
Since these contribution increases will occur automatically, it’s important to understand their potential impact on your take home income and KiwiSaver Savings; including whether your current KiwiSaver fund settings are still right for your goals.
This is a good opportunity to revisit your strategy and make sure your KiwiSaver setup is still serving your best interests.
For First-Home Buyers
Higher contribution rates help build your KiwiSaver balance faster — potentially reaching your deposit goal sooner.
However, it’s important to weigh:
- The change in your monthly take-home income and its impact on you and your household
- Whether other savings strategy outside KiwiSaver (e.g. term deposits) may suit short-term goals better
A shift from 3% to 3.5% then 4% can lead to substantial progress toward your savings goals in a few years.
For Retirement Savers
If you’re contributing for the long term, the increased rates will:
- Boost your regular savings
- Amplify long-term compounding effects
Over 30+ years, an increase in contribution to 3.5% or 4% can amount to significant increase in your KiwiSaver balance at retirement. This may create opportunities for you that you might not have had otherwise, such as retiring earlier or enjoying a better lifestyle in retirement.
Is it time to Revise Your KiwiSaver Strategy?
Whether you’re saving for your first home or a comfortable retirement, these contribution changes are an opportunity to pause and reflect:
- Are you contributing enough?
- Are you in the right fund for your goals?
- Could a small change today make a big difference later?
How National Capital Can Help
Choosing the right fund and contribution rate isn’t always simple. It depends on your:
- Goals (first home vs. retirement)
- Risk tolerance
- Financial situation
At National Capital, we offer free, independent KiwiSaver advice to help you:
- Choose the right fund and provider
- Understand your ideal contribution level
- Regularly review your investment to suit your changing needs
We support you from advice to execution — so your KiwiSaver works harder for your future.
👉 Take the Free KiwiSaver HealthCheck to start your KiwiSaver Success journey.