Minister of Finance Nicola Willis announced changes to KiwiSaver in this year's Budget. Photo / Mark Mitchell
Minister of Finance Nicola Willis announced changes to KiwiSaver in this year's Budget. Photo / Mark Mitchell
Changes to the KiwiSaver scheme are expected to save the Crown a total of $2.467 billion over a four-year period.
Major changes to the savings scheme were announced in this year’s Budget - including slashing the Government’s contribution from 50c to 25c for every dollar contributed,cutting the maximum payment to $260.72.
In addition, those who earn more than $180,000 a year are automatically exempt from receiving a Government contribution, in changes that came into force on July 1.
Contributions are now available to those aged 16 and 17.
Treasury has confirmed the total savings are forecast from the 2024/25 financial year to the 2028/29 financial year.
A spokesman for Minister of Finance Nicola Willis said the forecast $2.467b savings over that period relates to the change to the Government contribution only.
The spokesman pointed out while there is a saving from reducing the Government’s contribution, it’s important to note employer and employee contributions will increase.
“The overall impact of that is expected to be higher savings for everyday KiwiSaver investors‚” Willis’ office said.
“The Government also extended the KiwiSaver annual Government contribution (and employer matching) to 16 and 17-year-olds in the workforce, encouraging a life-long savings habit to secure Kiwi futures.”
The KiwiSaver changes are expected to save $.2467 billion.
On April 1, 2026, the default KiwiSaver contribution rate is set to increase from 3% to 3.5%, for individuals and employers, before rising to 4% from April 1, 2028.
The savings marked in Budget 2025 were prioritised towards economic growth matters like Investment Boost, health expenditure including Dunedin and Nelson Hospitals, education support, law and order, and social services.
At the time the KiwiSaver changes were announced, Willis described the scheme as helping to bolster the next generation, and allowing young people today to eventually retire with more savings and financial security.
“An increased contribution rate will also grow the funds available to young people for a first home deposit. Kiwis are able to withdraw from their KiwiSaver to purchase a first home, and larger fund balances can only help,” Willis added at the release of Budget 2025.
Labour criticised the move on Budget Day, accusing the Government of “raiding” retirement savings.
Recently-released Treasury documents confirm ministers received advice on getting rid of the Government’s annual contribution around KiwiSaver. Officials noted removing it would have “a negative impact on KiwiSaver balances,” in their advice on the Budget.
KiwiSaver continues to be a hot political topic, as New Zealand First has signalled its intention to campaign on compulsory contributions to rise to 10%, to be offset by tax cuts.
It made the announcement at the party’s conference in Palmerston North in September.
Azaria Howell is a multimedia reporter working from Parliament’s press gallery. She joined NZME in 2022 and became a Newstalk ZB political reporter in late 2024, with a keen interest in public service agency reform and government spending.
