KiwiSaver changes from 1 July 2025: What you need to know

26 June, 2025

Whether you’re just starting out in the workforce or steadily building your retirement fund, KiwiSaver plays a key role in helping New Zealanders save for their future. With Budget 2025 comes a range of KiwiSaver changes aimed at encouraging better saving habits while also keeping the scheme sustainable in the long term. As legal advisors, we’re here to help you understand what’s changing and what it means for you.

What’s changing and when

KiwiSaver is getting a refresh. From 1 July 2025, some significant adjustments will be introduced. The Government’s aim is to improve long-term savings outcomes while ensuring the scheme is financially responsible.

Key changes include:

A halving of the Government contribution to 25 cents for every dollar you contribute (up to $260.72 annually).
Removal of Government contributions for those earning over $180,000 per year.
Extension of eligibility to include 16- and 17-year-olds, encouraging early savings habits.
A gradual increase in the default contribution rate from 3% to 4%, phased in over three years.

Let’s break those down.

Government contributions: Reduced and means-tested

Currently, KiwiSaver members receive 50 cents for every dollar contributed, up to a maximum of $521.43 per year. From 1 July 2025, this will drop to 25 cents per dollar, with a new annual cap of $260.72.

If you earn over $180,000 per year, you’ll no longer be eligible for the Government contribution.

New savings support for 16–17-year-olds

A significant step forward: 16- and 17-year-olds who are employed will now be eligible to receive both the Government and employer contributions.

Higher default contributions (but with flexibility)

If you’re automatically enrolled in KiwiSaver, the default employee and employer contribution rates will gradually increase:

From 3% to 3.5% on 1 April 2026
Then to 4% on 1 April 2028

Not ready to contribute more? Don’t worry, you’ll be able to opt back down to 3% at any time. If you do, that lower rate will be matched by your employer. After 12 months, you’ll automatically return to the default rate but can choose to reduce it again if your circumstances require.

Why these changes matter

For most people, KiwiSaver is the most straightforward way to build up a financial safety net for retirement or a first home deposit. With an average KiwiSaver balance of $33,514 per member, the power of consistent saving is already clear.

The Government hopes that by slightly lifting contribution levels and encouraging earlier participation, KiwiSaver balances will grow faster, giving New Zealanders more saving power towards their first home or retirement.

It’s also hoped that increased KiwiSaver funds will strengthen the wider economy. Around 40% of KiwiSaver investments are currently held in New Zealand-based assets, and efforts are being made to reduce barriers that prevent investment in local businesses, infrastructure, and development projects.

What this means for you

Whether you’re an employee, an employer, a parent helping your teen start saving, or someone nearing retirement, these changes affect how much you save and how much support you receive along the way.

Now’s a great time to:

Review your KiwiSaver contributions directly with your Kiwisaver provider and make sure your fund is working for your goals
Check your eligibility for Government incentives
Ensure that you are across employer requirements for your employees’ Kiwisaver payments

If you’d like tailored legal guidance on withdrawing your KiwiSaver, our team is here to help.

The content provided in this article is for informational and educational purposes. Always seek guidance from a qualified financial planner, legal adviser, or tax professional before making any decisions related to Kiwisaver or other financial matters.