Understanding the Upcoming Changes and Their Impact on Retirement Savings

New Zealanders will soon see changes to KiwiSaver contribution rates, affecting both employees and employers.

With the country’s population structure evolving, these adjustments aim to encourage greater personal savings for retirement.

Here’s what you need to know about the upcoming increases and their implications.

Key Changes to KiwiSaver Contribution Rates

The minimum KiwiSaver contribution rates are set to rise in two stages:

• From 1 April 2026: Minimum employee and employer contributions will increase to 3.5% each.
• From 1 April 2028: Minimum employee and employer contributions will further increase to 4% each.

These adjustments apply to all employees and employers currently making compulsory minimum contributions. For official details, visit Inland Revenue or MBIE.

Why the Changes Are Important

New Zealand is experiencing significant demographic shifts. Research by Professor Paul Spoonley highlights a rapidly growing population aged 65 and older, declining birth rates, and a decreasing ratio of working-age people to retirees.

These factors put pressure on public retirement systems and make personal savings more crucial than ever.

What Employees and Employers Should Expect

Employees contributing at the minimum rate will see their KiwiSaver deductions increase in 2026 and again in 2028, boosting their long-term savings.

Employers will need to update payroll systems and adjust budgets to meet the new contribution requirements.

Illustrative Impact: Comparing Contribution Rates

Consider a 35‑year‑old earning $100,000 per year and starting with a KiwiSaver balance of $20,000. Contributing at the current minimum of 3% (employee) and 3% (employer) could see their balance grow significantly over time, assuming steady contributions and long‑term investment returns. Increasing contributions to 4% each could boost the projected retirement balance by around 25–30% over the same period. These figures are indicative only; actual outcomes depend on investment returns, fees, taxes, salary growth, fund selection, and time in the market.

The Power of Small Increases

Even modest increases in contribution rates can significantly impact retirement savings due to the effect of compounding.

As employer contributions rise, additional savings accumulate over decades, becoming especially important amid New Zealand’s demographic challenges.

Need Personalised Advice?

If you’re unsure how these changes may affect your retirement plans, Central Financial Planning’s experienced team can help. They offer guidance on contribution options, model retirement scenarios, and support informed decision-making.

Contact Central Financial Planning:

📞 Phone: 03 448 8613

📧 Email: [email protected]

🌐 Website: www.centralfp.co.nz