Budget 2025 has introduced some significant updates to KiwiSaver. These changes are aimed at ensuring the scheme remains sustainable while helping New Zealanders grow their retirement savings. Whether you are just starting out, nearing retirement, or somewhere in between, here's what you need to know and how it might affect your financial plans.
Government top-ups are being reduced
From 1 July 2025, the government contribution to KiwiSaver will drop from 50 cents to 25 cents for every dollar you contribute. This means the maximum annual top-up will reduce from $521.43 to $260.72. You will still need to contribute at least $1,042.86 each year to receive the full entitlement.
High earners no longer eligible for government contributions
If you earn more than $180,000 a year, you will no longer be eligible to receive the government contribution from 1 July 2025. Inland Revenue will determine this based on your most recently filed tax return. This change targets support toward low- and middle-income earners.
Young workers now included
Currently, 16 and 17-year-olds are not eligible for government contributions. From 1 July 2025, they will be included. And from 1 April 2026, employers will also be required to make KiwiSaver contributions for any employees in this age group.
Consider how these changes might affect your retirement goals and whether adjusting your contribution rate makes sense.
Default contribution rates are increasing
If you are in a KiwiSaver fund or currently contributing at the minimum rate, your contribution will increase automatically over the next few years. From 1 April 2026, the default employee and employer rate will rise to 3.5%, and again to 4% from 1 April 2028.
These changes are designed to gradually boost long-term savings, and they will happen automatically unless you choose to adjust your contribution rate or switch providers.
What will this look like over the long-term?
Take Stacey, for example. She’s 35, earns $75,000 a year, and has $20,000 already saved in her balanced KiwiSaver fund. Right now, she contributes the minimum 3 percent, which will gradually increase to 4 percent under the new rules. If nothing changed, Stacey could expect to have around $219,755 in her KiwiSaver by age 65. But with these new contribution settings in place, and without her having to lift a finger, that total jumps to around $266,271. That is an increase of $46,516 without making any changes on her end.
Source: sorted.org.nz
Temporary option to reduce your contributions
Recognising that life is not always linear, a new option will allow members to reduce their contribution rate back to 3 percent temporarily for up to 12 months. This option becomes available from 1 April 2026 and is designed to offer flexibility during periods of financial stress or change.
Your options remain open
Despite the changes, your ability to contribute more than the default remains. You can still select rates of 6 percent, 8 percent, or 10 percent if you are able to invest more into your future. Contributing above the minimum will continue to be a sound strategy for building long-term retirement wealth.
Why these changes matter
These updates reflect the government’s focus on making KiwiSaver more sustainable while encouraging higher contributions from members. By gradually increasing default savings rates and refocusing government contributions, the scheme is shifting to support those who need it most.
What You Should Do Now
Now is a good time to review your KiwiSaver strategy. Consider how these changes might affect your retirement goals and whether adjusting your contribution rate makes sense. At Lifetime, we’re here to help you make informed decisions based on what matters most to you. Because smart planning today means greater financial certainty tomorrow.
If you’re unsure how these changes affect you, or what your next steps should be, we’re always here to help.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular person's objectives, financial situation or needs. Any opinions contained in it are held by the author as at the report date and are subject to change without notice.
