KiwiSaver Is Changing: What Budget 2025 Means for Your Savings

If you’re a KiwiSaver member, Budget 2025 brings some of the biggest changes to the scheme in years. Whether you’re saving for your first home or building a nest egg for retirement, here’s what you need to know - and what it could mean for your future.

• Increased Contribution Rates: Default employee and employer contributions rising to 3.5% in April 2026 and 4% in April 2028.

• Government Contribution Reduction: Government contribution halves to 25 cents per dollar, with a maximum of $260.72 per year.

• Means Testing: High earners (over $180,000) are no longer eligible for the government contribution.

• Young Savers: 16- and 17-year-olds become eligible for government contributions (from July 2025) and employer contributions (from April 2026).

From 1 April 2026, the default employee and employer contribution rate will rise from 3% to 3.5%, and then to 4% from 1 April 2028. This means, over time, more of your pay (and your employer’s) will be going into your KiwiSaver account, helping your balance grow faster.

Worried about the jump? You’ll be able to temporarily “opt down” to the current 3% rate for up to 12 months at a time if you need a breather.

After that, you’ll be nudged back up to the new default. This phased approach is designed to help both employees and employers adjust gradually.

The government’s annual KiwiSaver contribution is being cut in half. From 1 July 2025, you’ll get 25 cents for every dollar you contribute (down from 50 cents), up to a new maximum of $260.72 per year (previously $521.43).

To get the full amount, you’ll still need to contribute at least $1,042.86 annually yourself.

This change is all about making the scheme more “fiscally sustainable,” but it does mean less free money from the government each year.

If you earn more than $180,000 a year, you’ll no longer be eligible for the government’s KiwiSaver contribution. This will be assessed based on your income in one of the last two tax years, after your tax return is finalised.

The aim? To target government support to those who need it most.

Good news for younger savers: from 1 July 2025, 16- and 17-year-olds will be eligible for the government contribution, and from 1 April 2026, they’ll also get mandatory employer contributions if they’re working.

This gives young people a head start on building long-term savings and developing good money habits early

For most KiwiSaver members, the increase in employee and employer contributions will more than make up for the smaller government top-up over time.

More money going in means more compounding returns, whether you’re saving for a first home or retirement.

If you’re self-employed or not getting employer contributions, the halved government contribution will sting a bit more, but the hope is that the industry will keep working to make saving easier for everyone

These changes are designed to make KiwiSaver more sustainable for the government, while nudging New Zealanders to save more for their futures.

If you want to see how the new rules affect your own savings, try out Sorted’s KiwiSaver calculator and update your contribution settings if needed.

Change can be unsettling, but in this case, the long-term impact for most will be positive - bigger balances, more investment returns, and a stronger foundation for your financial future.

As always, the best thing you can do is stay informed, review your KiwiSaver settings, and keep your goals in sight.