The main headline from the 2025 Budget, at least in financial advice circles, has been about the changes to KiwiSaver. There have been adjustments to employment contribution levels, eligibility ages, and the government contribution.
Minimum contributions for employees and
employers will increase from 3% to 4%. This will be done in steps, first rising to 3.5% from April 2026 and to 4% from April 2028. Employees will have the option to stick with 3%, but this means their employer can stick with 3% too.
16- and 17-year-olds will be eligible for the government contribution from July and
employment contributions from April 2026. This is great encouragement for younger members.
The government contribution will be cut from 50c in the $1 to 25c from July 2025. So this June is the last year qualifying members will get $521.43 from the Government. Next year if you save $1,042.86 into your KiwiSaver account the Government will contribute $260.72. If you earn more than $180,000 p.a. you will not be eligible for any Government contribution at all.
So, what does it mean? Obviously that will depend on your situation. Generally speaking there is now a really good reason to enrol 16 and 17 year olds into the scheme. If you’re a higher wage earner, you’ll grow your investment from your salary contributions, but the government carrot is gone. If you’re on a tight budget, you’ll need to consider carefully about opting out of the 4% contribution.
Regardless, it’s imperative to make sure you’re in the right fund to achieve your retirement goals.
A review with your financial adviser might be in order.
Another budget item which may be more important than people realise, is extra funding for Statistics NZ. Not all the details are out yet, but there is a separate $16 million line item set aside to fund a monthly Consumer Price Index – which is how we measure inflation. Currently this is only reported quarterly, which makes it very difficult for the Reserve Bank to truly know where inflation is heading and make the right policy moves. This change will finally see NZ in line with international standards. Whether the Reserve Bank will make different decisions with more accurate data remains to be seen. The more frequent reporting is not expected until 2027.
