Budget 2025 KiwiSaver Changes Set To Leave More New Zealanders Better Off In Retirement
The Retirement Commissioner welcomes news the Government is making changes to KiwiSaver which early estimates suggest will leave more New Zealanders with more money saved for their retirement.
Announced in the Budget 2025, employee and employer contributions to KiwiSaver will move to 3.5% from 1 April 2026 and then to 4% from 1 April 2028. Alongside these changes, the government contribution is decreasing to 25% (i.e 25 cents for every $1 contributed to a maximum of $260.72) and removed entirely for those earning over $180,000, effective from 1 July.
The Sorted KiwiSaver Calculator is currently the only tool in the country which reflects the Budget 2025 announcements, giving New Zealanders the chance to see how the changes will impact them and what their retirement savings would have looked like without them.
There are approximately 3.4 million KiwiSaver members, and 2.2 million received an employer and a government contribution or only a government contribution in 2024.
Retirement Commissioner Jane Wrightson says, 'we're pleased to see the Government take on board some of the key recommendations we made in 2024, including introducing a higher default contribution rate of 4% for employees and matched by their employers, and extending employer contributions to those aged 16 and 17. We'd also recommended employer contributions for those over 65 but unfortunately the latter has been excluded from these latest changes.
'While increasing contribution rates is generally beneficial for salary and wage earners who qualify for an employer contribution, not everyone benefits from these changes. The reduction in the government contribution will hit low-income earners, Māori, women, and the self employed the hardest.'
In March, the Retirement Commission released its annual analysis of KiwiSaver balances data which revealed the gender retirement savings gap shows men having on average 25% higher KiwiSaver balances compared to women.
'It's a shame there are so few government incentives for a scheme that underpins private saving for retirement. I would at least have liked to see some of the savings from reducing government contributions be applied to serving those groups where we see the widest retirement savings gaps,' says the Retirement Commissioner.
'We also hope employers respect the spirit of the changes and understand why they were necessary, passing the savings onto their staff rather than including them as part of total remuneration - which should be banned.'
The Retirement Commission will continue to explore the impacts of these changes as part of the 2025 Review of Retirement Income Policies (RRIP) with a focus on how the Government could most effectively reduce gaps in retirement income outcomes.
Summary of the Budget 2025 changes
• Employee and employer contributions move to 3.5% from 1 April 2026 and then to 4% from 1 April 2028.
• A new temporary savings reduction will be introduced, modelled on the existing temporary savings suspension, allowing members to opt to reduce their contribution rate to 3% for a period of up to 12 months. Members can take multiple temporary reductions. If a member takes a savings reduction their employer can match them at that rate.
• The government contribution matching rate is reduced to 25% (i.e. 25 cents for every $1 contributed up to a maximum government contribution of $260.72) from 1 July 2025.
• Members with an annual income of more than $180,000 will no longer be eligible for the government contribution from 1 July 2025.
• 16- and 17-year-olds become eligible for employer contributions from 1 April 2026 (note they will not be auto-enrolled. The age for auto-enrolment remains at 18, but if they join, or have already joined, and contribute, they will be eligible for the matching employer contribution).
• 16- and 17-year-olds become eligible for the government contribution, if they contribute, from 1 July 2025.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
2 hours ago
- RNZ News
Calls for government to unlock KiwiSaver to buy farms
money farming 29 minutes ago There have been calls for the government to unlock KiwiSaver so the funds can be used to buy a first farm, not just a house. At the moment if you have been contributing to KiwiSaver for three years you can withdraw almost all the money to buy a first home to live in. Now, Federated Farmers has launched a petition urging the government to losen the rules for accessing the retirement scheme and have said it will turbo charge the next generation of famers. Federated Farmers Dairy chair, Richard McIntyre spoke to Lisa Owen.
Scoop
2 hours ago
- Scoop
Library Association Congratulate Christchurch City Council For Recognising Pay Equity For Library Workers
Press Release – LIANZA Andrew Rutledge, General Manager, Citizens and Community at Christchurch City Council, announced that library shelvers, library assistants and librarians would be receiving a pay increase. Pay rates are expected to increase by 10-14%. The Library and Information Association of NZ Aotearoa (LIANZA) congratulate Christchurch City Council for announcing a pay increase for Council library workers. The association say that this is great news after the recent dismantling of Pay Equity Legislation in May. 'We know that library workers are very upset with the government for the sudden change in pay equity legislation, which sees library assistants starting from ground zero despite their claims being lodged six years ago,' says Laura Marshall, LIANZA executive director. 'So, Christchurch City Council's acknowledgement of the need for fair pay and the historic underpayment of library workers based on their gender is encouraging. 'We'd love to see other councils being as proactive in recognising this historic underpayment.' The Christchurch City Council was party to one of the six claims made six years ago, along with six different councils, on the basis that the work of librarians and library assistants is historically and currently undervalued, as it is predominantly performed by women. On May 30, Andrew Rutledge, General Manager, Citizens and Community at Christchurch City Council, made an announcement on behalf of the organisation relating to the discontinuation of the shelvers and library assistants' gender-based pay equity claim. This is a result of the government's changes to the Equal Pay Act in May. Andrew Rutledge announced that library shelvers, library assistants and librarians would be receiving a pay increase. Pay rates are expected to increase by 10-14%. In making this announcement, Andrew Rutlege acknowledged that the librarian role has historically been a female-dominated role (80% of library workers are women) and, in all likelihood, would qualify for consideration under the Amended Equal Pay Act. 'We would like to acknowledge Christchurch City Council's proactive stance in implementing these changes and hope it impacts on the pay rates for all library workers in New Zealand. 'And we'd like to see this start the ball rolling in other councils.' LIANZA say that while these increases are unlikely to meet comparator levels of pay, they are higher than the average pay rate of a library assistant – around $57,000 a year. 'It's good to see this recognition of the disparity many library workers face with their pay. They deserve to be paid a fair wage. 'Many library workers have spent 4-6 years in tertiary education and are undertaking highly skilled and demanding roles.' LIANZA says librarians are information managers, researchers and programme deliverers. They manage a massive public resource, and sizable budgets aimed at educating and enhancing the knowledge and skill levels of New Zealanders across the community and various sectors. Selecting, purchasing, and maintaining these assets requires skills and a wide knowledge base. In many libraries, it also means dealing with stressed community members, teaching and providing programmes, being digital enablers and providing social as well as education and knowledge support. Evidence collected for the library assistant claims revealed that the skills required for this work are categorised into 22 distinct areas, ranging from information technology to communication, cultural sensitivity, legal expertise, teaching skills, and financial management. With responsibilities being extremely broad-ranging, they include responsibilities for the well-being and safety of others, information technology, management, books and collections, and events and programmes. Working conditions are very busy, emotionally demanding, and involve flexibility to switch rapidly between different tasks, as well as exposure to infection. A high level of effort is required by Library Assistants, including constant vigilance, no downtime, and physical effort to move large numbers of books. In 2023, a pay equity claim for school librarians was settled and which delivered10- 40% pay increases for many.
RNZ News
4 hours ago
- RNZ News
Government invests $13.5 million in bid to attract 72,000 more visitors to NZ
The government has announced another multi-million dollar funding boost for Tourism New Zealand in a bid to attract 72,000 more visitors to our shores. Tourism and Hospitality Minister Louise Upston said $13.5 million in funding would help to target the core markets of Australia, the United States and China over the next few years. "This investment is expected to generate around $300 million in spending, which is a very strong return on investment," she said. "International visitor numbers continue to climb and this boost will help drive further economic growth throughout the entire country." Less than two months ago, she announced a separate $13.5 million boost for Tourism New Zealand to fund marketing in the shorter term, with the aims of attracting an extra 23,000 international visitors by the end of March 2026 and bringing in an additional $100 million. The international visitor levy - which was nearly tripled last year - is covering the costs for both. "We know how important marketing is to attract visitors, with around 14 percent of international holiday visitors directly influenced by Tourism New Zealand's marketing activity," Upston said. "We want people to know New Zealand is open for business and we welcome visitors with open arms." She described the funding as the first investment in the government's Tourism Growth Roadmap , which outlines the initiatives to help the government and industry double the value of tourism exports by 2034. "We know how important marketing is to attract visitors, with around 14 percent of international holiday visitors directly influenced by Tourism New Zealand's marketing activity," Upston said. Last year, Tourism New Zealand unveiled an ambitious strategy to grow tourism by $5 billion by attracting more visitors outside of summer over four years. It aimed to grow international tourism spend by 8.7 percent, or an additional $900 million in the strategy's first year. February marked the largest number of American visitors that Aotearoa had ever recorded in a month. At tourism conference TRENZ last month, Tourism New Zealand chief executive René de Monchy said that had been buoyed by airlines opening up new routes, a tailwind of a strong American dollar and focused marketing, and the outlook for American visitors remained really positive. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
