KiwiSaver: Cut-off for Government contribution nears – why funds could last 30% longer

• June 30 is the last date for KiwiSaver members to get the $521.43 Government contribution before it is halved from July 1.
• Minimum employee and employer KiwiSaver contributions will rise to 4% by 2028.
• The Retirement Commission says KiwiSaver changes announced in Budget 2025 should result in KiwiSaver funds lasting 30% longer.

The cut-off is nearing for KiwiSaver members to receive the Government’s full contribution – the last time before it halves.

For every $1 a member pays into KiwiSaver up to $1042.86 each year, the Government puts in 50c – or $521.43 annually.

But from July 1, the Government contribution is decreasing to 25% (or 25 cents for every $1 contributed) to a maximum of $260.72.

The annual cut-off to receive the Government contribution is June 30.

Despite the decrease in Government contributions, the Retirement Commission says most KiwiSaver funds should last 30% longer under new changes announced in Budget 2025.

Those changes include minimum employee and employer KiwiSaver contributions moving from 3% to 3.5% from April 1 next year and then to 4% from April 1, 2028.

This would offset decreases in the Government contribution.

Analysis from the Retirement Commission found the contribution change should increase retirement savings for around 80% of contributing KiwiSaver members.

For a 35-year-old on an average salary of $80,000, the change in contribution from 3% to 4% could result in a 25% higher KiwiSaver retirement balance at age 65.

A 16-year-old earning $30,000, who is not currently contributing but intended to begin contributions at 18 pre-change, is modelled to have about 26% more in additional savings between 2025 and age 65, compared to 22% for a currently contributing 16-year-old.

“Our findings show that the increase of the default employee and employer contribution settings could result in retirement funds lasting on average approximately 30% longer than under the pre-Budget 2025 settings for median salary and wage earners who contribute without interruption over a 40-year working life,” said Retirement Commissioner Jane Wrightson.

But for the about 200,000 members receiving only a Government contribution – including self-employed workers – the changes will result in a decrease in their KiwiSaver retirement savings balance, the analysis found.

“It’s clear further work needs to be done to consider how we can better support the other 20% who are missing out on savings, which includes low-income earners, the self-employed and many women, Māori and Pacific peoples,” Wrightson said.

The Retirement Commission said $1 billion was spent on the KiwiSaver government contribution last year.

About two-thirds (2.2 million) of KiwiSaver members received a government contribution, with 77% of those receiving the full amount of $521.43.

Finance Minister Nicola Willis told Ryan Bridge on Herald Now that the changes to KiwiSaver would provide people with “a lot of financial security” and “a much bigger nest egg”.

Asked whether Kiwis would be worse off overall – by paying more now for our retirement later – Willis responded: “I just don’t accept that at all”.

“We are also doing other pro-growth, pro-wages policies including Investment Boost and other growth initiatives, so that overall we’re confident that wages will keep growing,” Willis said.