KiwiSaver Changes 2025-2028: How Budget Updates Affect Your Take-Home Pay
Ultimate Salary Calculator Team
Our content is written and reviewed by finance and tax enthusiasts to ensure accuracy.
The New Zealand Government has announced significant changes to KiwiSaver that will roll out between 2025 and 2028. These changes will directly impact your salary calculations, take-home pay, and retirement savings strategy. Here's everything you need to know about how these updates affect your finances.
Key KiwiSaver Changes at a Glance
Government Contribution Cuts (Effective July 1, 2025)
Before (2024)
- • Matching rate: 50 cents per dollar
- • Maximum annual: $521.43
- • Available to: All income levels
- • Age eligibility: 18-65 years
After (2025)
- • Matching rate: 25 cents per dollar
- • Maximum annual: $260.72
- • Income threshold: Under $180,000
- • Age eligibility: 16-65 years
Rising Contribution Rates
| Effective Date | Employee Rate | Employer Rate | Total Rate |
|---|---|---|---|
| Current (2024-2025) | 3% | 3% | 6% |
| April 1, 2026 | 3.5% | 3.5% | 7% |
| April 1, 2028 | 4% | 4% | 8% |
How This Impacts Your Salary Calculator
Example 1: Average Earner ($60,000 annual salary)
2024 KiwiSaver Breakdown
2025 KiwiSaver Breakdown (Government Changes)
Loss: $260.71 less government contribution annually
2028 KiwiSaver Breakdown (4% Rate)
Additional: $600 less take-home pay vs 2024
Take-Home Pay Impact by Salary Level
| Annual Salary | 2024 Deduction | 2025 Deduction | 2028 Deduction | Annual Difference |
|---|---|---|---|---|
| $40,000 | $1,200 | $1,200 | $1,600 | -$400 |
| $60,000 | $1,800 | $1,800 | $2,400 | -$600 |
| $80,000 | $2,400 | $2,400 | $3,200 | -$800 |
| $100,000 | $3,000 | $3,000 | $4,000 | -$1,000 |
| $200,000+ | $6,000 | $6,000* | $8,000* | -$2,000* |
*High earners (over $180,000) lose government contribution from 2025
Strategic Responses to KiwiSaver Changes
Temporary Reduction Options
12-Month Reduction Window
When rates increase, you can apply to stay at the lower rate for up to 12 months:
2026 Rate Increase
- • Apply to stay at 3% until March 2027
- • Saves $300 annually on $60k salary
- • Must apply before April 1, 2026
- • Can only reduce once per rate change
2028 Rate Increase
- • Apply to stay at 3.5% until March 2029
- • Saves $300 annually on $60k salary
- • Must apply before April 1, 2028
- • Separate application required
High Earner Strategies (Over $180,000)
Loss of Government Contribution
- Annual loss: Up to $521.43 in government matching
- Consider voluntary contributions: Make up shortfall with additional personal contributions
- Tax advantages remain: Still get employer contributions and tax benefits
Alternative Strategies
- PIE funds: Consider Portfolio Investment Entity funds with lower tax rates
- Investment property: Diversify retirement savings outside KiwiSaver
- Salary sacrifice: Maximize employer KiwiSaver contributions
Young Worker Benefits
16-17 Year Old Eligibility
From July 1, 2025, younger workers become eligible for government contributions:
Benefits
- • Up to $260.72 annual government contribution
- • Earlier retirement savings start
- • Employer contributions still apply
- • Can access for first home purchase
Considerations
- • Reduces take-home pay significantly
- • May impact student savings
- • Consider part-time work implications
- • Can opt out if necessary
Planning for the Changes
Budget Adjustment Timeline
July 2025: Government Contribution Cuts
- Impact: Reduced retirement savings growth, no immediate take-home pay change
- Action: Consider increasing voluntary contributions to maintain savings rate
- High earners: Plan alternative retirement savings strategies
April 2026: First Rate Increase (3.5%)
- Impact: $300-1,000 less annual take-home pay depending on salary
- Action: Adjust monthly budget 3-6 months in advance
- Option: Apply for 12-month reduction if budget is tight
April 2028: Second Rate Increase (4%)
- Impact: Additional $300-1,000 less annual take-home pay
- Action: Plan for total reduction of $600-2,000 vs 2024 levels
- Option: Final 12-month reduction window available
Monthly Budgeting Impact
$60,000 Salary Impact
$100,000 Salary Impact
Long-Term Retirement Impact
Despite the reduced government contributions, the higher contribution rates will significantly improve retirement outcomes:
40-Year Career Projection ($60,000 average salary)
Under Old System (3% + government)
- • Total contributions: ~$450,000
- • Investment growth: ~$900,000
- • Total balance: ~$1,350,000
Under New System (4% + reduced government)
- • Total contributions: ~$570,000
- • Investment growth: ~$1,140,000
- • Total balance: ~$1,710,000
Net benefit: ~$360,000 more at retirement despite government cuts
Key Takeaways
Plan Ahead
Adjust your monthly budget gradually to accommodate the $300-1,000 annual reduction in take-home pay by 2028.
Use Temporary Reductions Wisely
Apply for 12-month reductions during tight budget periods, but remember this delays retirement savings growth.
High Earners: Alternative Strategies
Consider PIE funds, investment properties, or additional voluntary contributions to offset lost government matching.
Long-Term Benefits
Despite immediate pain, higher contribution rates will result in significantly better retirement outcomes for most New Zealanders.
Use our salary calculator to model these KiwiSaver changes and understand exactly how they'll affect your take-home pay over the coming years.