KiwiSaver Contribution Changes from 1 April 2026
From 1 April 2026, important KiwiSaver contribution changes will come into effect that will impact both employees and employers across New Zealand. These changes are designed to encourage greater long-term retirement savings, but they also introduce new compliance and payroll considerations for businesses.
Understanding what is changing — and how to prepare — will help avoid payroll errors, employee confusion, and potential compliance risks.
Increase in Default Contribution Rates
The most significant update is the increase in the default KiwiSaver contribution rate from 3% to 3.5% for both employees and employers. This means that, unless an employee is contributing at a higher rate (such as 4%, 6%, 8%, or 10%), their minimum contribution will automatically rise from 1 April 2026.
For employers, this translates directly into higher payroll costs. Even a 0.5% increase can have a noticeable financial impact across a larger workforce, so budgeting for this change now is essential.
Businesses should also review employment agreements and remuneration structures — especially where employees are on total remuneration packages — to ensure the KiwiSaver increase is treated correctly.
Temporary Rate Reduction Option
Employees who feel they cannot afford the higher 3.5% contribution will have the option to apply for a temporary rate reduction from 1 February 2026. If approved, they can continue contributing at 3% for a period ranging from 3 months up to 12 months.
Employers can choose to match the reduced employee rate, meaning they may also continue contributing at 3% during that period. However, once the employee returns to the standard rate, employer contributions must increase to 3.5% again.
Payroll teams will need to monitor Inland Revenue notifications closely to ensure contribution rates are updated correctly when changes occur.
Employer Contributions for 16 and 17-Year-Olds
Another key change is that from 1 April 2026, employees aged 16 and 17 will become eligible for compulsory employer KiwiSaver contributions, provided they are contributing from their wages and meet eligibility criteria.
Previously, employer contributions were only required for employees aged 18 to 65. This extension means businesses employing younger staff — common in retail, hospitality, and part-time roles — will now have additional payroll obligations.
Employers should identify any staff in this age group and ensure payroll systems are updated to automatically calculate and pay employer KiwiSaver contributions from April 2026 onward.
Planning and Compliance Considerations
These changes may seem modest, but they can create ripple effects across payroll systems, employment agreements, budgeting, and staff communications. Failing to implement the new rates correctly could lead to compliance issues and potential penalties.
Now is the time for businesses to:
Review payroll software and contribution settings
Assess the financial impact of higher employer contributions
Update employment agreements if required
Communicate upcoming changes clearly to employees
Early preparation will make the transition smoother and avoid last-minute administrative stress.
Final Thoughts
The KiwiSaver contribution increases from 1 April 2026 represent a positive step toward stronger retirement savings for employees. However, they also place new administrative and financial responsibilities on employers.
By planning ahead, reviewing payroll processes, and educating staff about their options — including temporary rate reductions — businesses can remain compliant while supporting their employees’ long-term financial wellbeing.