What Budget 2025 brings to your KiwiSaver future

Change is coming! Employees will be stepping up contributions gradually to at least 4%, employers will too, and 16-year-olds will get matching contributions from employers and government as well.

This year’s Budget includes some meaningful improvements to how our KiwiSaver system works. So, whether you’re saving for your first home or long-term planning for retirement, let’s unpack what that means for you.

Here are the changes:

Employee and employer contributions are moving from 3% to 3.5% in April 2026, then to 4% in April 2028. (They can still be kept at 3% temporarily if needed.)
Those aged 16 and over will be eligible for government contributions (as of 1 July) and employer contributions (April 2026).
The government contribution is reducing from a maximum of $521 to $260.72 per year (from 1 July 2025), and those earning $180,000 will no longer receive it.

You can see how much of a difference all this makes to you by using our KiwiSaver calculator. Be sure to pop in what your contributions are currently and our calculator will adjust to reflect all of the new changes which are relevant to you.

More money flowing towards funds

First things first: the default KiwiSaver contribution rate for both employees and employers is going up. Starting 1 April 2026, contributions will rise from 3% to 3.5% of your pre-tax salary or wages. By 1 April 2028, that will increase again to 4%.

Those contributing the present 3% will need to gradually up your game. If you’re already contributing 4%, your employers will need to step up as well and match it (although that does get taxed, so it’s somewhat less than what you put in).

Now if you’re thinking, “But I’m already feeling the pinch – how will I manage the higher contributions?” – don’t worry. Anyone unable to contribute at these higher rates can temporarily stick to 3%. You can do this for up to 12 months at a time, and you can renew this lower rate before being automatically bumped up to 3.5% and eventually to 4%.

All these greater contributions mean more money going into your KiwiSaver account, and that’s money you won’t just save – it’ll be invested and thanks to compounding interest will grow over time. Think of it as giving your future self a bigger boost. Every dollar you save now means a lot more in the long run.

Younger earners get in earlier on the KiwiSaver action

There’s good news for the younger crowd, too. Starting 1 July 2025, 16- and 17-year-olds will be eligible for government contributions for the year, which will land in their KiwiSaver accounts in July 2026. From 1 April 2026, they will also be eligible for employer contributions.

It's important to know that 16- and 17-year-olds won’t be automatically opted in to KiwiSaver like those 18 and over though. They need to sign up to KiwiSaver with a parent’s permission.

If you’re in this age bracket, you’re getting two extra years to grow your savings – and that’s two more years of investment returns and compounding working in your favour. But you will need to make it happen.

Government contributions: smaller, but still helpful

Now onto the government contribution part – there’s a bit of a shift here. The KiwiSaver government contribution is reducing to 25 cents for every dollar you contribute, down from 50 cents. The maximum contribution you’ll be eligible for each year will be $260.72, starting 1 July 2025. For anyone earning more than $180,000 a year, the government contribution won’t apply anymore.

Although this reduction might feel like a downside, 80% of KiwiSaver members will still benefit more from the higher employer and employee contributions over the long run. And if you’re self-employed or not receiving employer-matching contributions, we hear you – we’re still keen to improve the situation for those missing out and are encouraging the KiwiSaver industry to make saving and investing easier for self-employed Kiwis.

The bigger picture: more for your first home and retirement

Higher contribution rates mean you’ll have more money working for you. If you’re saving for your first home, that bigger KiwiSaver balance could make all the difference when it comes to your deposit. If you’re planning for your retirement, those contributions will grow over time, helping you achieve a more comfortable and secure future.

Think of KiwiSaver like planting a tree. With the right care – regular contributions, a solid investment strategy and a bit of patience – you’ll watch it grow into something meaningful. These changes are designed to give your KiwiSaver tree a bit more sunlight and water, so it thrives.

Have a look at what these changes mean for you by using our KiwiSaver calculator

How much of a difference could all this really make? Our KiwiSaver calculator is here to help. By plugging in your salary, wages, contribution rate and current balance, you’ll get a clear picture of how these adjustments will impact you over time.

The tool has been updated to reflect the latest KiwiSaver settings rolled out in Budget 2025, so you’re seeing the most accurate numbers. (You can also compare your results with those you would’ve had if these changes hadn’t been brought in.)

It’s a great way to get an idea of how much you can expect to have when you retire – and whether you’re on track to meet your long-term goals. And if you find yourself a bit underwhelmed by the estimates, there are key levers you can pull to alter your future even more for the better.

Real-life read: Monnie

How I turned my finances around and you can too

Comments

23 May 25
John

The improvements to KiwiSaver are well overdue by government.
If we are to succeed as a country in this space we need continuous uplifts to contribution rates.
You only need to look to Australia who does retirement savings well.
22 May 25
David

Is Sorted government-funded or government-run? Because this is total propaganda. The higher default employer contribution will likely just lead employers to take the extra percentage they have to pay out of the total salaries they currently pay - offering slightly less for new hires (and maybe even current employees) to compensate for the increased rate. Why do you think companies will cop the economic harm this one time? The government has just decapitated pay equity, and cut government KiwiSaver contributions in half, but we should be thankful? I don't care that I save more of my own money by saving more of my own money. I care that I get $260 less per year in free government contribution-matching.
22 May 25
Anonymous

Don’t try and pitch this as a good thing. It’s going to cost kiwis more every pay at a time when the cost of living is far too high. This is terrible news.