What the Budget 2025 means for your KiwiSaver

The Government has announced its Budget for 2025, and there are some important changes coming to KiwiSaver that you’ll want to be aware of. At AMP, we’re here to help you understand what these shifts mean for your savings journey.

So, here’s a quick rundown of what’s changing.

• The default employee and employer contribution rates are set to increase from the current 3% (of your salary or wages) to 4%.
• The government contribution rate will be halved from 50 cents for every dollar you contribute, down to 25 cents. This means the maximum annual government contribution you can receive will decrease from $521.43 to $260.72.
• KiwiSaver eligibility will extend to 16 and 17-year-olds, allowing them to access both employer and Government contributions.
• Those earning over $180,000 will no longer be eligible for the government contribution.

If you’d like to learn more about the changes to KiwiSaver and what they could mean for you, read on.
 

Your contributions are increasing (gradually)

The default employee and employer contribution rates are set to increase from the current 3% (of your salary of wages) to 4% in two steps.

• From 1 April 2026: The default rate will increase to 3.5%.
• From 1 April 2028: The default rate will increase to 4%.

What this means for you

If you’re currently contributing to your KiwiSaver at the 3% default rate, your contributions (and your employer’s matching contributions) will gradually increase. This means more funds flowing into your KiwiSaver account, potentially accelerating your savings growth over time.

Option to opt-down

You will have the option to temporarily opt-down to the current contribution rate of 3%, if you feel you may be unable to afford an increased contribution, or if you wish to save in other ways outside of KiwiSaver. From 1 February 2026, you will be able to apply to Inland Revenue to continue contributing a rate of 3% (and your employer will match that rate). This 3% contribution rate will apply for up to 12 months, after you will default back to the higher rate. You can re-apply for a temporary rate reduction every 12 months, and there is no limit on the number of rate reductions you can take.

Changes to the government contribution

The government contribution is being adjusted:

• Halved in value: From 1 July 2025, the government contribution will be halved from 50 cents for every dollar you contribute, down to 25 cents.
• Reduced maximum: This means the maximum annual government contribution you can receive will decrease from $521.43 to $260.72. To get this maximum, you’ll still need to contribute at least $1042.86 yourself each year.
• Eligibility for those earning over $180,000: From 1 July 2025, if your taxable income is over $180,000 per year, you will no longer be able to receive the annual government contribution.

What this means for you

For most KiwiSaver members, the long-term benefit of increased employer and employee contributions is expected to outweigh the reduction in the government contribution. However, if you earn over $180,000 or primarily rely on the government contribution (e.g. self-employed and not contributing much yourself), you might see a reduced benefit from this specific aspect of KiwiSaver.

Current year's government contribution

The current year's government contribution (for contributions made between 1 July 2024 and 30 June 2025) will still be paid out at the previous rate of up to $521.43 in July/August this year.

Younger Kiwi get a head start

Great news for our younger generation! KiwiSaver benefits are being extended to 16 and 17-year-olds:

• Government contribution: From 1 July 2025, 16 and 17-year-olds will be eligible for the government contribution if they contribute enough to their KiwiSaver account.
• Employer contributions: From 1 April 2026, 16 and 17-year-olds in paid work will also become eligible for mandatory employer contributions, provided they've joined KiwiSaver and are making employee contributions.

What this means for you (or your rangatahi)

This provides an opportunity for young people to start saving earlier, allowing their money more time to grow thanks to the power of compounding. While auto-enrolment still begins at 18, 16 and 17-year-olds can now proactively opt in and benefit from these contributions.
 

Frequently asked questions