KiwiSaver in 2025: What’s Changing and How to Make the Most of It

By Jason Choy, Senior Portfolio Manager at InvestNow – 26 June 2025

Recent updates to KiwiSaver, announced as part of the government’s latest budget, are set to affect a wide range of New Zealanders. While projections suggest that as many as 80% of savers could benefit from these adjustments, that alone won’t guarantee a comfortable retirement.

According to Massey University research, even owning a home outright doesn’t mean your retirement needs are modest. A couple living in one of New Zealand’s main centres may need up to $1.2 million to maintain a comfortable lifestyle post-retirement.

So what do these KiwiSaver changes mean in practical terms—and how can you take action today to ensure your savings stay on track? Let’s explore.

Employer and Employee Contributions Are Increasing—But It’s Not Always Straightforward

Starting 1 April 2026, the compulsory minimum KiwiSaver contribution will rise from 3% to 3.5%, then to 4% in 2028—for both employees and employers.

This could translate into a meaningful boost. A 35-year-old earning $80,000 annually might see their KiwiSaver balance grow by as much as 25% by retirement. However, not everyone will benefit equally.

If your salary package includes KiwiSaver as part of a Total Remuneration agreement, any increase in employer contributions may simply come out of your existing pay. About 45% of employers structure pay this way—so it’s worth checking the details of your contract.

Also, if your employer already contributes more than the current minimum, you may not notice any change.

If you’re due for a pay review or starting a new role, this is a good opportunity to negotiate an arrangement where the employer fully covers the increase. Over time, that extra support could make a big difference.

Government Contribution Halved: A Wake-Up Call for Savers

From 1 July 2025, the government’s annual KiwiSaver contribution will reduce to $260.72, down from $521.43. Those earning over $180,000 annually will no longer be eligible for the match at all.

It’s a disappointing cut—but it’s still “free money” for many Kiwis. Over a 40-year working life, even this reduced amount could build up to almost $13,000 in contributions alone—not including investment growth.

If you’re self-employed or not contributing regularly, aim to top up your KiwiSaver with at least $1,042.86 each year to unlock the full government match. It’s one of the few no-strings-attached benefits available to individual investors in New Zealand.

That said, this change hits lower-income earners hardest, as the government contribution typically makes up a bigger slice of their overall savings. If it puts your retirement goals out of reach, consider either increasing your personal KiwiSaver contributions or investing separately in other funds with more flexibility (and more temptation to withdraw early—so proceed carefully).

New Option to Temporarily Lower Your Contributions

From February 2026, KiwiSaver members will have the option to temporarily reduce their employee contributions to 3% for a period of up to 12 months, with the possibility of extending beyond that.

This could be a lifeline during times of financial strain—but it comes with a catch: your employer can also reduce their matching contributions to the same lower rate.

The long-term impact of reducing contributions shouldn’t be underestimated. Dropping just $1,000 from your annual savings early in your career could result in $15,000 less at retirement, assuming average returns of 7% annually over 40 years.

In short: only reduce contributions as a last resort.

Good News for Teens: KiwiSaver Access Expands to 16–17 Year Olds

From April 2026, 16- and 17-year-olds will be eligible for both employer and government contributions if they join KiwiSaver. While auto-enrolment will still kick in at 18, this change gives working teens a powerful head start.

Starting early is one of the most effective strategies in investing, thanks to compound growth. So, if you have a teenager with a part-time job, it’s worth encouraging them to sign up and contribute—even small amounts can snowball over decades.

Simple Steps to Strengthen Your Retirement Strategy

While the budget changes are mostly positive, they won’t replace the need for smart, proactive planning. Here’s what you can do now:

1. Regularly Check Your Retirement Progress

Tools like Sorted’s Retirement Planner or the InvestNow Retirement Balance Calculator can help you work out if you’re on track. If not, think about increasing your contributions, switching to a higher-growth fund, or investing in addition to KiwiSaver.

2. Align Your Risk Level With Your Goals

Make sure your KiwiSaver fund matches both your timeframe and your risk tolerance.

1. Got decades to go? A growth or aggressive fund may suit you best.
2. Nearing retirement? A balanced or conservative fund could reduce volatility.
3. Already retired? You might still benefit from keeping part of your funds invested—retirement can last 20+ years.

Your risk appetite may change as life unfolds, so revisit your fund choice regularly.

3. Don’t Set and Forget Forever

KiwiSaver works well as a hands-off solution, but that doesn’t mean you should ignore it completely. Review your fund’s performance, fees, and investment strategy at least once a year.

If your fund isn’t performing, or your values change, it might be time to switch. Diversification is also worth exploring—platforms like the InvestNow KiwiSaver Scheme let you spread your money across different fund managers, adding another layer of resilience.

Your Retirement, Your Responsibility

The 2025 KiwiSaver updates are designed to improve long-term outcomes, but the real gains will come from the choices you make today.

KiwiSaver is simple by design—but that simplicity can lead to inaction. Staying informed and making small, strategic changes can have a massive effect on your retirement lifestyle.

Don’t leave your future to chance. Take a few minutes now to assess your KiwiSaver and consider if it’s time to make a tweak—or a bigger change.

At InvestNow, we offer tools, guidance, and the flexibility to tailor your KiwiSaver to your life. Signing up takes just a few minutes, and we make switching easy.

Take control of your future. It starts today!