KiwiSaver 2.0 - What's Changing and When

Budget 2025 introduced significant updates to KiwiSaver, aiming to enhance long-term savings while ensuring the scheme's sustainability. Key changes include adjustments to the Government Contribution, eligibility criteria, and contribution rates. 

Many of these changes will take effect in 1 July 2025. Here's a breakdown of what's changing and how it might affect your savings strategy.

The key changes at a glance

The Main Changes

1. Government Contribution is Being Halved

From 1 July 2025, the Government Contribution will be reduced from 50c to 25c for every $1 you contribute. 

The key Point here is that the annual Govt contribution you will see in your KiwiSaver annual statement will reduce from $521.43 to $260.72.  BUT: You’ll still need to contribute at least $1,042.86 annually to get that new full amount.

✅ In plain terms: You’ll put in the same as now, but get half the top-up.  

2. High-Income Cap Introduced

The government is now introducing a High Income Cap to Govt Contributions. Therefore limiting eligibility for the annual government contribution.

The key point here is if you earn over $180,000 a year, you’ll no longer qualify for the Government Contribution from July 2025.

3.  Young Kiwis Get a Boost

The Government have extended KiwiSaver eligibility to 16-17 year-olds, allowing them to access both employer and Government contributions.  These changes are being introduced over two timeframes:

• From 1 July 2025, young members aged 16–17 will become eligible for Government Contributions. This means that young people aged 16-17 will now be able to receive a government contribution provided they contribute sufficient funds to their KiwiSaver account.
  
  
• From 1 April 2026, employers will also be required to contribute to their KiwiSaver accounts. This means 16- and 17-year-olds in paid work will be eligible for mandatory employer KiwiSaver contributions.

The Key Point here is this is not automatic - they will need to join KiwiSaver if they have not already, and elect to make employee contributions.

The age for auto-enrolment will remain at 18.

4.  Minimum Contribution Rates Are Increasing

For all members contributing at the minimum (default) rate, it will increase from 3% to 3.5% on 1 April 2026 and then again to 4% on 1 April 2028

These increases apply to both employee and employer contributions,

However, if needed, KiwiSaver Members can still apply to Inland Revenue from 1 February 2026  to reduce their rate back to 3% temporarily for 12 months, with the ability to reapply for another rate reduction.

Once an application for a rate reduction has been approved, Inland Revenue will notify both the KiwiSaver member and the member’s employer of the rate reduction.

The key point here is if a member applies for a savings rate reduction their employer will also be required to contribute at 3 per cent.  After 12 months, the member will automatically go back to the higher rate, or they can apply for another temporary savings reduction.

What will this mean for your KiwiSaver balance

How these changes will impact you will depend on your individual circumstances, including what your current KiwiSaver balance is, how much you earn, how much you contribute, and what sort of KiwiSaver fund you are in. 

For more Information you can see some example scenarios in this Budget Factsheet about the new changes.

Or you can use the Sorted KiwiSaver Calculator to see how much of a difference it really makes

Some Practical Tips

1.  Review your current KiwiSaver contribution setting

2.  Teens or parents of teens? Start early to benefit from Govt Contributions

3.  Employers: Review matching policies and upcoming changes

4.  Check fund fees and whether your current provider fits your long-term goals

Checklist: Your KiwiSaver Check-In

☐  Review your KiwiSaver ?

☐  Am I contributing enough to get the full the Govt Contribution (if eligible)?

☐  Have I reviewed my KiwiSaver fund in the past year?

☐  Do I know when my current fund’s fees changed last?

☐  Is my fund aligned with my long-term goals (e.g. growth vs conservative)?

☐  Is my teenager (16-17) KiwiSaver contributing enough to get the full the Govt Contribution?

☐  Is my teenager (16-17) enrolled and ready to receive new benefits?

Final Thoughts

While the changes to Government Contributions may initially seem discouraging, it’s important to look at the broader impact. For the vast majority—around 80%—of KiwiSaver members, increased employer and employee contribution rates will provide greater long-term benefits. 

With higher contributions, your KiwiSaver savings have increased potential to grow, whether you’re building a deposit for your first home or investing for your retirement. Over time, these enhanced contributions can help you achieve a more secure and comfortable financial future

Let us know what you think in the comments? 

Written by: Alan Sharpe

Alan is a key member of the HealthCarePlus leadership team. With over 30 years experience in marketing and customer service roles he is a passionate advocate for the union movement and HealthCarePlus’s mission to create real, lasting value for their members