Preparing for KiwiSaver changes in April 2026

Published 15 January 2026 | 5 min read

From 1 April 2026, significant changes to KiwiSaver will come into effect following decisions in Budget 2025. These updates will increase compulsory contribution rates, extend employer obligations to younger workers, and introduce new administrative requirements for payroll and HR teams.

Employers should begin preparing now to avoid compliance risks and payroll disruption.

What is changing?

Mandatory KiwiSaver rate increase

From 1 April 2026, the minimum compulsory KiwiSaver contribution rate will increase from 3% to 3.5% of gross pay for both employees and employers.

For employees currently on the default 3% rate, employers will be required to timely update payroll systems so that:

• employee deductions increase to 3.5%, and
• employer contributions also increase to 3.5%,

from the first pay period on or after 1 April 2026.

This change will apply unless an employee has an approved temporary rate reduction.

New obligations for 16 and 17-year-old employees

A key shift under the new rules is the extension of compulsory employer contributions to 16 and 17-year-olds who:

• are enrolled in KiwiSaver, and
• are making their own employee contributions.

From April 2026, employers will be required to contribute 3.5% for these younger employees in the same way as for adult staff.

Employers should review dates of birth and KiwiSaver enrolment status to ensure affected employees are identified and correctly paid.

Managing temporary rate reductions (“opt-down”)

From 1 February 2026, employees will be able to apply to Inland Revenue for a temporary reduction in their KiwiSaver contribution rate, allowing them to remain at 3% for a period of 3 to 12 months.

Where an employee is granted a temporary reduction, the employer can choose to match the temporary rate reduction for the same period.

Inland Revenue will notify employers when the approved reduction ends. At the end of the reduction period, contributions must automatically return to 3.5%, making payroll monitoring essential.

Ongoing compliance and future increases

These changes are part of a wider phased approach. Employers should also be aware that:

• KiwiSaver contribution rates are scheduled to rise again to 4% in April 2028, 
• payroll systems must be capable of handling multiple rates and timely adjustments, and
• younger employees can now be part of the compulsory contribution pool.

While not legally required, clear communication with staff is strongly recommended to manage expectations around take-home pay and contribution changes.

Why employers should act now

Although the first rate increase does not take effect until 1 April 2026, preparation should start well in advance. Employers should:

• audit payroll software and settings,
• review employment agreements, especially total remuneration clauses,
• check employee age and KiwiSaver status data, and
• plan staff communications around upcoming deductions.

Early action will reduce compliance risk and help ensure a smooth transition when the changes take effect.

FAQs: KiwiSaver changes for employers

When do the new KiwiSaver rates start?

The increase to 3.5% for both employees and employers applies from 1 April 2026. Temporary opt-down applications open from 1 February 2026.

Do employers have to contribute for 16 and 17-year-olds?

Yes. From April 2026, employers must contribute for 16 and 17-year-olds who are enrolled in KiwiSaver and making their own contributions.

What happens if an employee opts down to 3%?

If Inland Revenue approves a temporary reduction, both employee and employer contributions remain at 3% for the approved period. Employers must increase contributions back to 3.5% when notified that the opt-down period has ended.

Will contribution rates increase again?

Yes. The next scheduled increase is to 4% in April 2028.

Why do employers need to review employment agreements, especially total remuneration clauses?

Some employment agreements include a total remuneration clause, where employer KiwiSaver contributions are included within an overall pay figure rather than paid on top of wages or salary. When compulsory KiwiSaver rates increase, this can reduce an employee’s take-home pay unless the total remuneration is adjusted. Reviewing agreements now helps clarify how increases will be treated, ensures payroll applies the changes correctly, and reduces the risk of disputes.

What should employers review now?

Payroll system capability, employment agreements, employee age records, KiwiSaver status, and internal communication plans.

If you're an employer seeking advice, our friendly HR and employment experts are just an email or a phone call away. 

Email us at info@eqconsultants.co.nz, or call us on 03 366 4034 for professional, one-on-one guidance.

This article is not intended as legal advice but is designed to alert employers to relevant developments and how to prepare.

Note: This information is based on current Inland Revenue and Budget 2025 announcements and is subject to change. Always refer to the latest guidelines for the most accurate information. Visit Inland Revenue here.