From 1 April 2026, the New Zealand Government is increasing the default KiwiSaver contribution rates for both employees and employers. While the change may seem small, it will have a real impact on take‑home pay, payroll costs, and business budgets, so it’s important to be prepared.
What’s Changing?
Currently, the default KiwiSaver contribution rate is 3% for both employees and employers. From 1 April 2026, this will increase to 3.5%. This change applies automatically to anyone contributing at the default rate.
There is also a further increase planned to 4% from 1 April 2028, making this part of a longer‑term shift to encourage higher retirement savings.
What This Means for Employers
If you employ staff, this change is particularly important:
- Employer KiwiSaver contributions will increase for employees who are on the default rate.
- Payroll systems must be updated so the correct rates are applied from the first pay run on or after 1 April 2026, check with your payroll provider as they may handle this change automatically for you.
- The increase represents a real cost increase, which should be factored into budgets and cash‑flow forecasts.
If you are currently working through your 2027 financial budget, it’s important to allow for this additional KiwiSaver cost. If you don’t yet have a budget in place, this is a great time to put one together — and we can help.
What This Means for Employees
For employees, the change will be felt in two ways:
- You may notice a small reduction in your take‑home pay, as a higher percentage of your wages goes into KiwiSaver.
- At the same time, more money will be going into your KiwiSaver account, helping to grow your retirement savings faster over time.
Even a 0.5% increase can make a meaningful difference to long‑term savings when combined with employer contributions and investment returns.
Is There Any Flexibility?
Yes. Employees who feel they cannot afford the increase can apply to Inland Revenue for a temporary rate reduction, allowing them to remain at 3% for a period of 3 to 12 months. Applications open from 1 February 2026. Employers can choose to match the reduced rate if a valid reduction is in place.
How can YHPJ help?
If you’d like help preparing for the 1 April 2026 KiwiSaver changes, or want to review your payroll or budget, get in touch with our team.
