1 July 2025: Changes to Government Contributions

From 1 July 2025, the Government contribution to KiwiSaver will be halved. Currently, the Government contributes 50 cents for every $1 you contribute, up to a maximum of $521.43 per year. Under the new rules, this will be reduced to 25 cents per $1, lowering the maximum Government contribution to $260.72 annually.

This change will significantly affect members who have come to rely on the Government top-up as a core part of their KiwiSaver growth. It’s important to plan ahead and consider increasing your own contributions if your goal is to reach a certain balance by retirement or for your first home.

There’s good news for younger savers: If you're aged 16 or 17, you’ll now be eligible for Government contributions, provided you meet other eligibility criteria. This opens the door for more youth participation in long-term savings.

On the other hand, high-income earners (those earning over $180,000 annually) will no longer qualify for the Government contribution from 1 July 2025. This change is aimed at making the scheme more equitable and targeted toward those who benefit most from additional saving support.

Important note: These changes will not affect the current year’s Government contribution. For the tax year ending 30 June 2025, members will still be eligible for the full $521.43 top-up, which will be paid out in July and August 2025.

1 April 2026: Default Contribution Rate Increases

From 1 April 2026, the default contribution rate for both employees and employers will increase from 3% to 3.5%. This means that if you are enrolled in KiwiSaver and haven't selected a different rate, your contribution—and your employer's matching contribution—will automatically increase.

To support savers who may not be in a position to contribute more, the Government is also introducing a Temporary Rate Reduction. From 1 February 2026, you can apply to keep your contribution at 3% for a period of three to twelve months. Employers can choose to match this temporary rate as well.

More Support for 16 and 17-Year-Olds

Starting 1 April 2026, employers will be required to make KiwiSaver contributions for employees aged 16 and 17, aligning them with the rules already in place for those aged 18 and older. This is a win for young savers who are entering the workforce early and looking to get a head start on building financial security.

1 April 2028: Further Rate Increase

The final stage of the changes will take place on 1 April 2028, when the default KiwiSaver contribution rate will rise again—from 3.5% to 4% for both employees and employers. This gradual increase is designed to make it easier for savers to adapt while still growing their long-term retirement and homeownership funds.

Need Help Understanding How These Changes Affect You?

At Tax Professionals, we’re here to help you make the most of your KiwiSaver contributions, understand tax implications, and plan your financial future with confidence.

📞 Call us on 09 625 0035
🌐 Visit: www.taxprofessionals.co.nz