Upcoming Changes to KiwiSaver Contribution Rates

KiwiSaver Contribution Rates Change from 1 April 2026: What NZ Employers Need to Know

From 1 April 2026, KiwiSaver contribution rates are changing across New Zealand. This affects both employers and employees. If you run payroll for a small or medium-sized business, you need to understand what’s changing and what to do next. The good news is that this update is simple, and most payroll systems will handle it automatically. This article explains the change in plain English and gives you a checklist to stay compliant.

What’s Changing on 1 April 2026?

The default KiwiSaver contribution rate is increasing:

• From 3% to 3.5% for employees
• From 3% to 3.5% for employers (compulsory minimum)

This change was introduced under Budget 2025 and confirmed by Inland Revenue.

The rate increases again later:

• From 3.5% to 4% on 1 April 2028

Who Does This Affect?

This affects employees who are currently on the default 3% KiwiSaver contribution rate.

Many employees choose a higher rate (like 4%, 6%, 8% or 10%). If your team member is already on a higher rate, there’s no change to their rate.

But if they are on 3%, their KiwiSaver deductions will increase unless they take action.

What Employers Must Do

1. Payroll deductions must be correct from the first pay after 1 April: The new rate applies from the first pay date on or after 1 April 2026. Most payroll systems should update automatically, but it’s still worth checking.

2. Your employer KiwiSaver contribution may increase: If your employee goes from 3% to 3.5%, your minimum employer contribution also increases to match the new compulsory minimum rate. That means a cost increase for businesses.

Can Employees Stay on 3%?

Yes. Employees can apply for a temporary KiwiSaver rate reduction to stay at 3%, even after 1 April 2026. They’ll be able to apply for a temporary rate reduction for a 3 month (92 days) to 12 month period.

Key details:

• Applications open from 1 February 2026
• The reduced rate can only start from 1 April 2026

If the employee has a confirmed temporary rate reduction, employers can match that lower rate once it takes effect. Once they get moved from the temporary rate to a higher rate, Inland Revenue will notify you, the employer.

What This Means for Payroll Budgets

Even small percentage changes add up. For employers, this is a real payroll cost increase. For example:

If an employee earns $70,000 per year:

• Employer KiwiSaver at 3% = $2,100
• Employer KiwiSaver at 3.5% = $2,450
• Difference = $350 per year, per employee

Multiply that across your team, and this becomes a budgeting item worth planning for.

What You Should Do Now (Employer Checklist)

Here’s a simple checklist for kiwi small businesses:

• Check your payroll system settings (Xero, iPayroll, MYOB, Smartly, PayHero, etc.)
• Confirm your employee KiwiSaver rates (who is on default 3%)
• Update your payroll budget for the increased employer contribution
• Prepare staff communication (see template below)
• Remind employees of their options (3.5%, or apply to stay at 3%)

How to Communicate This to Staff (Script Template)

Many employees will notice their net pay drop slightly. The best approach is a short, calm message.

You can send something like this:

“From 1 April 2026 the default KiwiSaver contribution rate is increasing from 3% to 3.5%. This change is set by the Government. If you currently contribute at 3%, your deductions will increase from the first pay run on or after 1 April. You can choose a different rate, or apply for a temporary rate reduction if needed.”

This helps reduce confusion and keeps things transparent.

Common Questions We’ve Received

Q) Does this change apply to all employees?

No. It mainly affects employees who are currently on the default 3% rate. Employees already on higher rates won’t be impacted.

Q) Does the employer rate also increase?

Yes. The compulsory minimum employer contribution increases to 3.5% from 1 April 2026.

Q) Can employees opt out?

Employees can apply for a temporary rate reduction to remain at 3%. Applications open 1 February 2026.

We Are Here to Help

For most businesses, this will be a low-effort compliance update. But it’s still important because:

• payroll costs may increase
• staff may have questions
• your payroll system must be set correctly

A quick review in February or March will help you avoid issues in April.

If you’d like help reviewing your payroll settings, budgeting for the change, or drafting a staff notice, we can help you get ready before 1 April 2026. Get in touch with our business advisors today to get started.

Together we can achieve more.