KiwiSaver Changes from 1 April 2026: What Employers Should Tell Staff Now
From 1 April 2026, an important KiwiSaver change takes effect that employers need to be ready for. The default KiwiSaver contribution rate will increase from 3% to 3.5% for both employees and employers. For many businesses, this is likely to trigger questions from staff once they notice a difference in their pay.
The real issue is not just payroll compliance, it is communication. If staff are not told in advance why their take-home pay has reduced slightly, or why the employer contribution shown on a payslip does not always match what lands in their KiwiSaver account, those conversations can quickly become awkward.
What is changing on 1 April 2026?
Inland Revenue has confirmed three key changes from 1 April 2026:
- The default employee KiwiSaver contribution rate increases from 3% to 3.5%
- The minimum compulsory employer contribution rate also increases from 3% to 3.5%
- 16 and 17-year-old KiwiSaver members will become eligible for employer contributions (if they meet the normal eligibility criteria)
It is important to note that all other KiwiSaver employee contribution options remain unchanged. Employees can still choose to contribute 4%, 6%, 8%, or 10% of their gross salary or wages if they wish. The change only affects the default 3% rate, which increases to 3.5%.
The new rate applies based on the payday, not the pay period. This means if a payday falls on or after 1 April 2026, the KiwiSaver contributions for that pay will be calculated at 3.5%, even if some of the work was performed before that date.
Why staff may notice the change
For employees currently contributing 3%, the most obvious impact is that a slightly larger amount will be deducted from their pay. This means their take-home pay may reduce slightly from the first pay run after 1 April.
Another area that can cause confusion is that employer KiwiSaver contributions are subject to Employer Superannuation Contribution Tax (ESCT). This means that while the employer contributes 3.5%, the amount that appears in the employee’s KiwiSaver account may be slightly lower once tax is applied.
Without an explanation, employees sometimes assume the employer has not paid the correct amount.
What employers should communicate before 1 April
A short explanation to staff before the change takes effect can avoid unnecessary payroll queries. Employers should let staff know that:
- from 1 April 2026, the default KiwiSaver contribution rate increases from 3% to 3.5%
- the minimum employer contribution will also increase to 3.5%
- all other employee contribution options (4%, 6%, 8%, and 10%) remain unchanged
- the change applies based on the payday
- employer contributions may appear lower in the KiwiSaver account than on the payslip because ESCT tax is deducted
Temporary rate reduction option
Employees who wish to remain temporarily at 3% instead of moving to 3.5% may be able to apply to Inland Revenue for a temporary rate reduction. Inland Revenue has advised that this option can apply for between three months and twelve months, and employees apply directly through IRD.
Employers should simply direct employees to Inland Revenue for information rather than providing financial advice. Official guidance from Inland Revenue can be found here: https://www.ird.govt.nz/kiwisaver-changes
