From 1 April 2026, changes to KiwiSaver contribution rates will come into effect. While this may feel some way off, we’re already seeing questions from employers and it’s worth understanding what this could mean for your payroll costs and workforce planning.
Here’s a summary of what’s changing:
1. Default contribution rates increasing to 3.5%
From 1 April 2026, both:
- The default employee contribution rate
- The default employer contribution rate
will increase from 3% to 3.5%.
For businesses, this means a direct increase in employment costs for staff who are contributing at the default rate. Depending on your team size, this may have a noticeable impact on payroll budgets for the 2026 financial year.
2. Employees can request a temporary rate reduction
Employees can request a temporary reduction back to 3%.
If this happens, employers have a choice:
- Continue contributing at 3.5%, or
- Match the employee’s temporarily reduced rate (3%)
There is no one-size-fits-all approach here. Your decision may depend on:
- Employment agreements
- Remuneration policies
- Internal fairness considerations
- Cost management
We recommend reviewing employment agreements and contribution policies well ahead of April 2026 to ensure there are no unintended obligations.
3. Employer contributions extended to 16 & 17-year-olds
Compulsory employer contributions will also extend to 16 and 17-year-olds.
While they will not be automatically enrolled, if they are KiwiSaver members and contributing, employers will now be required to contribute as well.
For businesses employing younger staff, this is another factor to plan for in future payroll budgets.
What should you be doing now?
- Review the potential payroll cost impact for 2026
- Check employment agreements for contribution clauses
- Consider whether you’ll adopt a consistent policy around temporary rate reductions
- Ensure your payroll system is ready to handle the changes
If you’d like us to model the cost impact for your business or review your current employment settings, we’re happy to help.
As always, the key is planning early not reacting at the last minute.