Major KiwiSaver Changes Just Announced in the Budget 2025
The Government has just revealed its Budget for 2025 and it does bring the most significant changes to KiwiSaver in more than a decade. The biggest change is the drop in the Government Contribution – though to be clear, the payments for 1 July 2024 – 30 June 2025 won’t change.
Here’s what’s changing:
Contribution Rates are Increasing
From April 2026, minimum contribution rates for both employees and employers will rise from 3% to 3.5%, and then to 4% from April 2028. This means both members and employers will be expected to put more into KiwiSaver by default – though opt-outs will be allowed.
Government Contribution Slashed
The annual $521 government contribution will be halved. From 1 July 2025 – 30 June 2026, members will receive 25c for every $1 they contribute, up to a maximum of $260.72 a year.
Means-Testing Introduced
The government contribution will be means-tested. From July, only those earning under $180,000 a year will be eligible to receive the government contribution.
Support Expanded to Young Savers
In a positive move, 16- and 17-year-olds will now be eligible for government contributions and employer matches will apply to them starting next year.
Why this Matters
These changes are a step, but in many ways, they fall short of what’s needed to truly strengthen KiwiSaver.
The halving of the government contribution is a significant cut, especially for everyday Kiwis who’ve relied on that annual top-up to boost their savings. It reduces the match from 50c per $1 contributed to just 25c with a new maximum of $260.72 per year.
Means-testing the government contribution – Higher-income clients ($180K plus) will now need to rely solely on their own and employer contributions to grow their balances, which makes reviewing their strategy more important than ever.
The planned increase in minimum contribution rates (from 3% to 3.5% in 2025, then to 4% by 2028) could help grow balances over time. But the devil’s in the detail: employees will be able to opt out of these increases, much like they do under Total Remuneration policies – and as we’ve seen, many will. There’s a risk more people will opt out than expected, limiting the intended impact.
While it’s a step in the right direction, there’s still no roadmap to get contribution rates where they need to be long-term (12–15%), nor any broader conversation about the future sustainability of NZ Super.