KiwiSaver is changing. Here's what's actually different — and what to do.

Budget 2025 reshaped KiwiSaver in four ways: a halved government contribution, a new income cap, a higher minimum contribution rate, and expanded eligibility for 16–17 year olds. Some changes started 1 July 2025. The bigger one starts 1 April 2026. Here's the plain-English version.

The government contribution is halved.

For nearly two decades, the government has matched 50 cents for every dollar you contributed to KiwiSaver, up to a yearly maximum of $521.43. From 1 July 2025, that match drops to 25 cents per dollar, and the maximum drops to $260.72.

To get the full $260.72, you need to contribute at least $521.43 of your own money in the KiwiSaver year (1 July to 30 June). Anyone earning above roughly $15,000 at a 3.5% contribution rate already clears that threshold easily — so the practical change for most people is just that the top-up is half what it used to be.

There's also a new income cap: if you earn more than $180,000 a year, you don't qualify for the government contribution at all. This affects a small slice of the workforce, but if you're in it, the contribution literally disappears.

What it means in dollars

Over a 30-year career you've lost roughly $7,800 in pure government-funded top-ups (compared to the old rules), before any compounding. Compounded at 6% over 30 years, that's closer to $20,000 of foregone retirement balance. Not life- changing, but worth paying attention to.

The minimum contribution rate goes from 3% to 3.5%.

Both you and your employer now have to contribute at least 3.5% of your gross pay, up from 3%. If you're currently on the default 3%, both contributions automatically rise to 3.5% on 1 April 2026 — your payslip will show a slightly smaller take-home, and your KiwiSaver will grow slightly faster.

If you already contribute more than 3.5% (4%, 6%, 8% or 10%), nothing changes for you — but your employer's minimum match still goes from 3% to 3.5% if they were on the default.

You can opt out — temporarily

If 3.5% genuinely doesn't fit your budget, you can apply to Inland Revenue for a temporary rate reduction back to 3%, for between 3 and 12 months. It's designed for people in tight financial spots — not as a permanent escape hatch.

First home buyers — pay attention

The KiwiSaver first home withdrawal eligibility rule says you must have contributed at the minimum rate for at least three years before withdrawing. From 1 April 2026, that minimum is 3.5%. If you're building toward a first home and you opt for the temporary reduction, the clock on your eligibility may pause — check with IR or an adviser before you do it.

The minimum rises again to 4%.

The 3.5% rate is the first step. Two years later, on 1 April 2028, the minimum contribution rate rises again from 3.5% to 4% — for both employee and employer. Same logic: phased in to give workers and businesses time to plan, and it gradually nudges KiwiSaver closer to retirement-saving rates that are already standard in Australia (12% in 2026) and the UK (8%).

For most people, the 1.0 percentage point rise from today's 3% to 2028's 4% adds something like $400–$1,200 of annual KiwiSaver inflows depending on your income — half from you, half from your employer.

16 and 17 year olds get phased into the full deal.

Until recently, 16 and 17 year olds in KiwiSaver missed out on both the government contribution and the employer match — they were saving in name only. The 2025 Budget fixed that, in two stages: the government contribution for 16–17 year olds started 1 July 2025, and employer matching for them starts 1 April 2026.

For a teenager working part-time during school or full-time after, that's a meaningful change. An extra two years of compounding, starting in their late teens instead of waiting until 18, can add tens of thousands to a retirement balance over the long run. If you've got a working teenager in your household, this is worth a conversation.

Three quick reads.