By Brett Ransley • 20 Mar 2026
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From 1 April 2026, KiwiSaver is changing in New Zealand, and both employers and employees need to be ready. The biggest update is that the default KiwiSaver contribution rate is increasing from 3% to 3.5% for both employees and employers. Inland Revenue has also confirmed that 16 and 17-year-old employees will become eligible for employer KiwiSaver contributions from the same date.
For businesses running payroll, this is more than just a small percentage change. It affects deductions, employer contribution costs, payroll system setup, and how you communicate with staff. If you are an employee, it may also affect your take-home pay unless you apply for a temporary rate reduction.
What is changing on 1 April 2026?
The main KiwiSaver changes taking effect on 1 April 2026 are:
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the default employee contribution rate increases from 3% to 3.5%
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the default employer contribution rate increases from 3% to 3.5%
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16 and 17-year-old KiwiSaver members who meet the rules will become eligible for employer contributions
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employees who want to stay at 3% can apply to Inland Revenue for a temporary rate reduction
These changes are part of a wider KiwiSaver reform package announced in Budget 2025, with a further increase planned later. The default rate is scheduled to rise again from 3.5% to 4% on 1 April 2028.
What this means for employees
If you are currently contributing to KiwiSaver at the default 3% rate, your contribution will automatically increase to 3.5% from 1 April 2026. In most cases, you do not need to do anything. Your employer will simply deduct the new amount through payroll from the relevant pay date.
If you already contribute more than 3%, your own contribution rate will not change. However, if your employer has only been contributing the minimum rate, their contribution will still need to increase to 3.5%.
For some workers, the change will slightly reduce take-home pay. That may not seem huge week to week, but it is still something employees should be aware of, especially if they are budgeting tightly. The upside is that more is being put aside for long-term savings and, for many people, first-home goals.
Can employees stay at 3%?
Yes. Inland Revenue has introduced a temporary rate reduction option for members who want to remain at 3% instead of moving to 3.5%. Employees can apply for this reduction for between 3 and 12 months, and applications can be made more than once if needed.
Inland Revenue says applications for the temporary rate reduction could be made from 1 February 2026, with the reduced rate applying from 1 April 2026. Employees who are approved need to provide their employer with Inland Revenue’s confirmation so payroll can continue deducting at 3% instead of 3.5%.
It is also worth noting that an employer can choose to match the employee’s temporary reduced rate.
What this means for employers
For employers, the 1 April 2026 change means payroll systems need to be updated so that the new default 3.5% employee deduction and 3.5% employer contribution are applied correctly. Inland Revenue specifically says employers need to ensure their payroll settings are updated, process any temporary rate reduction letters from staff, and begin making employer contributions for eligible 16 and 17-year-old employees.
A key point for payroll processing is the timing rule. Inland Revenue says the new rate applies to all pay days from 1 April 2026. That means even if a pay period covers work completed before and after 1 April, the whole contribution for that pay run is calculated at the new rate if the pay date falls on or after 1 April.
This is exactly the kind of change that can create confusion if a business is using spreadsheets, older payroll workflows, or a system that has not been properly updated in time.
KiwiSaver changes for 16 and 17-year-olds
Another important update is for younger workers. From 1 April 2026, eligible 16 and 17-year-old KiwiSaver members will qualify for employer KiwiSaver contributions. Inland Revenue says employers will need to start making these contributions automatically if the employee meets the eligibility criteria.
This follows an earlier change introduced from 1 July 2025, where 16 and 17-year-olds became eligible for the government KiwiSaver contribution, subject to the usual rules. Inland Revenue also says the maximum annual government contribution is now $260.72, and eligibility includes an annual taxable income threshold of $180,000 or less.
For employers with younger casual staff, part-time workers, or students, this is an important rule to be aware of. It may create a small increase in payroll cost, but it also gives younger employees a better start with long-term savings.
A quick example of the new rate
If an employee earns $1,000 gross in a pay run and is on the default KiwiSaver rate:
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before 1 April 2026, employee contribution at 3% = $30
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from 1 April 2026, employee contribution at 3.5% = $35
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before 1 April 2026, minimum employer contribution at 3% = $30
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from 1 April 2026, minimum employer contribution at 3.5% = $35
That means the employee contributes $5 more, and the employer also contributes $5 more, on every $1,000 of gross pay at the default rate. This example is a simple illustration based on Inland Revenue’s confirmed move from 3% to 3.5%.
What employers should do before 1 April 2026
If you run a business in New Zealand, now is the time to prepare. Before 1 April 2026, employers should:
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review payroll software and KiwiSaver settings
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check how the new 3.5% rate will affect wage costs
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identify any 16 and 17-year-old employees who may now require employer contributions
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let staff know that the default rate is increasing
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understand how to handle temporary rate reduction letters from Inland Revenue
If your payroll system is not up to date, or if your process is too manual, this is the sort of change that can lead to unnecessary errors.
How GoCasual can help
At GoCasual, we know payroll changes like this can catch businesses off guard, especially when you are managing casual staff, part-time workers, changing rosters, and variable hours.
The KiwiSaver changes from 1 April 2026 are manageable, but only if your payroll setup is ready. If your business needs a simpler way to manage staff pay, deductions, and changing payroll rules in New Zealand, GoCasual is built to make that easier.
Final thoughts
The KiwiSaver changes coming into effect on 1 April 2026 are important for both employees and employers. The default contribution rate is rising to 3.5%, younger workers aged 16 and 17 will start receiving employer contributions if eligible, and employees who need more flexibility can apply for a temporary rate reduction to stay at 3% for a period.
For employers, the main thing is to be ready before the first pay run that lands on or after 1 April 2026. A small payroll setting missed at the wrong time can create a lot of unnecessary admin later