Changes ahead, but your retirement plan is still on track

Changes ahead, but your retirement plan is still on track

For some, Budget Day can be exciting. For others, it’s just another day at the office.

Budget 2025, however, is a little different for us. You may have seen that the Government announced some changes to KiwiSaver.

From 1 April 2026, the default contribution rate for both employees and employers will increase to 3.5%, and then to 4% in 2028. And, generally, I think it’s a good idea to increase minimum contributions.

Your long-term retirement savings will be all the healthier for it, because small changes can mean massive savings. In fact, if you can afford to contribute more than the minimum, now might be a great time to think about it.

But I know money is tight for others, so thankfully, you will still be able to temporarily “opt down” to the current rate of 3% – and be matched by your employer at that rate.

There are a few other updates, too:

  • Government contributions will be reduced from 50 cents to 25 cents per $1 you contribute, with a new cap of $260.72 annually (instead of $521.43).
  • The Government will extend its contribution to 16 and 17-year-olds from 1 July 2025, and extend employer matching to 16- and 17-year-olds from 1 April 2026.
  • And if you earn more than $180,000 a year, you’ll no longer receive the government top-up.

Thankfully, Te Ara Ahunga Ora Retirement Commission thinks the changes are relatively positive.

It recently released a series of papers providing a full analysis of what the impacts will be for contributing members.

The first paper reveals that the changes should increase retirement savings for around 80% of contributing KiwiSaver members, despite the reduction in government contributions or its removal entirely for those earning over $180,000.

Regardless, if any of this sounds confusing or you need help making sense of what this means for you, you’re always welcome to give me or the team a call.

Please read the rest of our newsletter here. Until next time.

Kind regards,
Charlie Howe

Charlie Howe