KiwiSaver changes 2026: increased contribution rate of 3.5%

A small but important change is coming to KiwiSaver. The current default employee and employer contribution rates are increasing from 3% to 3.5% from 1 April 2026.  

What is KiwiSaver? 

KiwiSaver is Aotearoa New Zealand's voluntary, retirement savings scheme, set up by the government to help Kiwis save for retirement. KiwiSaver is designed so that if you're employed, a percentage of your pay goes into your KiwiSaver account and your employer contributes too. 

Your savings are invested in a fund managed by a KiwiSaver provider (like MAS) which you can choose. Over time, those contributions (combined with investment returns) grow into a nest egg you can access when you turn 65, or in certain other circumstances like buying your first home. 

There are currently several contribution rate options: 3%, 4%, 6%, 8% or 10% of your gross salary or wages. The default rate is currently 3%, this is generally matched by your employer, but this will change to 3.5% from 1 April 2026. 

What’s changing from 1 April 2026? 

• The default KiwiSaver contribution rate for both employees and employers is increasing to 3.5% from the current rate of 3%. 

• This applies to all KiwiSaver members contributing at the default rate through their salary or wages. 

• The adjustment happens automatically through your employer’s payroll systems, so you won’t have to do anything.  

• The government will extend employer contribution matching to 16 and 17-year-olds. 

If you’re contributing more than 3% already, your chosen rate will stay the same. 

A further rise of the default rate from 3.5% to 4% is scheduled for 1 April 2028 as a plan to boost long-term retirement savings for Kiwis. 

Why this matters for your retirement  

Most Kiwis simply aren't saving enough for retirement. According to the latest MJW research commissioned by the Retirement Commission, the average KiwiSaver balance across all members is $37,079 and for those aged 61 to 65 (on the cusp of accessing NZ Super) the average balance is only $69,104. How much people money people need to retire varies, but Massey University estimates that a one-person household ‘Choices’ Metro lifestyle requires a KiwiSaver balance or lump sum savings of approximately $273,000. 

The government's response to this is to gradually lift the default contribution rate, to 3.5% in April 2026 and 4% in April 2028, so that more Kiwis can build stronger savings habits without needing to actively make changes themselves. 

A higher contribution rate means more money going into your KiwiSaver account every time you get paid. Even a small increase in your contributions can make a meaningful difference over many years, thanks to compounding investment returns. 

Compounding means your investment returns generate their own returns over time. The longer your money is invested, the more powerful this effect becomes. An extra 0.5% contribution each pay cycle might seem small today but over a working lifetime, the numbers add up significantly. 

Government modelling shows that higher contribution rates can lead to up to 28% higher KiwiSaver balances at retirement, depending on income and circumstances.  

How this change affects KiwiSaver members and employers 

If you’re an employee 

• If you’re on the 3% rate, your contributions will automatically adjust to the new rate of 3.5% and you do not need to do anything. You might see a small drop in the pay you take-home, however, the extra 0.5% contribution can make a significant difference to your future savings.   

• If you are on a contribution rate higher than 3% (such as 4%, 6%, 8% or 10%), nothing will change. 

• If you’d prefer to continue contributing at the 3% rate, you can apply for a temporary rate reduction through Inland Revenue. Be aware that this may also result in your employer reducing their contribution to 3%. Whether they continue contributing 3.5% or match your reduced 3% contribution is entirely at their discretion. A temporary reduction can last between 3 and 12 months after which you will need to renew it again, if necessary. 

Health NZ/RNZCGP employees 

• With the upcoming increase to the KiwiSaver contribution rate to 3.5% on 1 April 2026, employees who currently split their contributions between a KiwiSaver scheme and another superannuation scheme (such as the MAS Retirement Savings Scheme) may need to adjust the proportion allocated to their non-KiwiSaver superannuation scheme.  

• This may apply to Health NZ employees and registrars of the Royal New Zealand College of General Practitioners (RNZCGP).  

• Members should discuss what these changes mean with their employer. 

• If you wish to change the contribution rate applied to the MAS Retirement Savings Scheme once the new KiwiSaver contribution rate takes effect, you will be required to complete the Health NZ/RNZCGP Contributions Form. This ensures your contribution settings are updated correctly. 

If you’re an employer 

If you manage payroll for your business, here's what you need to do: 

• Ensure payroll applies the new 3.5% default rate for both the employee and employer contributions.  

• If an employee has an approved temporary rate reduction, Inland Revenue will notify you and you can match their reduced rate or continue contributing at the higher default rate.  

• Compulsory employer contributions now also apply to eligible 16 and 17-year-olds.  

This is a good time to review your payroll processes and make sure contribution settings are up to date. 

What to do next? 

Most people won't need to take any action, but it's always a good idea to stay informed about your KiwiSaver settings and make sure your savings are working as hard as they can for you. You can: 

• Check your current contribution rate with your employer or through myIR. 

• Use the MAS KiwiSaver Calculator to see how different rates could affect your future savings.  

• Book a meeting with a MAS adviser if you’re unsure what contribution rate or fund option is best for you. 

• Review whether your KiwiSaver scheme fund type still aligns with your long-term plans using the MAS Fund Finder. 

There’s no need to make changes, these tools are simply there to help you make informed and confident decisions about your future savings. 

Medical Funds Management Limited is the issuer and manager of the MAS KiwiSaver Scheme and MAS Retirement Savings Scheme. The Product Disclosure Statements are available at MAS KiwiSaver Scheme PDS and MAS Retirement Savings Scheme PDS. 

MAS is a licensed financial advice provider. Our financial advice disclosure statement is available by visiting mas.co.nz or by calling 0800 800 627.