Budget changes 2025

KiwiSaver Changes Announced in the Government Budget (22 May 2025)

We would like to inform you about important changes to KiwiSaver that were announced in the Government's Budget on 22 May 2025. These changes will affect government contributions, general KiwiSaver settings and specific provisions for members aged 16 and 17. Below, we have grouped the changes for your convenience.

1. Government Contributions

  • Reduction in Government contribution rate: The annual Government contribution (GVC) will be reduced from 50 cents to 25 cents for each dollar you contribute, up to a new maximum of $260.72 per year. This change will take effect from 1 July 2025 for the 2026 GVC year and onwards (subject to any further changes).
  • Income threshold for GVC: Members earning above $180,000 per annum will not be eligible for the GVC. This change will also take effect from 1 July 2025.

2. Changes to KiwiSaver contributions  

  • Increased contribution rates: The default employer and employee contribution rates will increase in two stages:
  • From 1 April 2026, the default contribution rate will rise from 3% to 3.5%.
  • From 1 April 2028, the default contribution rate will further increase to 4%.
  • Temporary rate reduction option: Starting 1 February 2026, members will have the option to apply to Inland Revenue for a temporary rate reduction, allowing them to continue contributing at the current rate of 3% for a period of between 92 days and 12 months. There will be no limit on the number of rate reductions a member can apply for.

Important to note that if you are a member of New Zealand Defence Force and are in KiwiSaver, NZDF already contributes at the 4% rate.

3. Changes impacting 16 and 17-year olds

  • Eligibility for Government contributions: Members aged 16 and 17 will now be eligible for the GVC, effective from 1 July 2025. This means that if you are in this age group, you will be able to receive the same government contributions as those aged 18 and above subject to the same eligibility criteria. 
  • Compulsory Employer Contributions: From 1 April 2026, 16 and 17-year-olds who are KiwiSaver members and make employee contributions will be eligible to receive compulsory employer contributions.

Important to note that if you are a member of New Zealand Defence Force, are aged 16 or 17 and are in KiwiSaver, you already receive the employer contribution.

Will this affect my Government contribution for the year to 30 June 2025?

  • No, GVC for the year 1 July 2024 to 30 June 2025 are not affected for eligible members. GVC amounts and eligibility will be applied under the existing rules until 30 June 2025. 

Important timeframes

  • 1 July 2025: New GVC rates and income threshold come into effect.
  • 1 February 2026: Members can apply for temporary contribution rate reductions.
  • 1 April 2026: Default employer and employee contribution rates increase to 3.5% and eligibility for employer contributions for 16 and 17-year-olds begins.
  • 1 April 2028: Default employer and employee contribution rates increase to 4%.
  • We encourage all members to review these changes and consider how they may impact your KiwiSaver contributions and benefits. 

If you have any questions about what these changes mean to your KiwiSaver account or Category B in the Defence Force Superannuation Scheme and you need further clarification, please do not hesitate to reach out to an independently appointed Become Wealth team of advisers who can be contacted on 0508 BECOME (0508 232 663) or at hello@become.nz. If you are a member of NZDF and have questions about NZDF specific arrangements, you can also contact the Benefits team at benefits@nzdf.mil.nz.

Thank you for being a valued member of the NZDF Savings Schemes.

 

This article has been prepared by Mercer (N.Z) Limited. The information contained in this article is intended for general guidance only. It does not take into account your particular financial situation or goals. Before making any investment decision, you should refer to the Product Disclosure Statement or consult an appropriately qualified financial adviser. The New Zealand Defence Force KiwiSaver Scheme and Defence Force Superannuation Scheme are issued by Mercer (N.Z.) Limited. For information about the New Zealand Defence Force KiwiSaver Scheme, please refer to the relevant Product Disclosure Statement which are available free of charge on www.nzdfsavings.mil.nz.  The Defence Force Superannuation Scheme is closed to new members.

The material contained in this article is based on information received in good faith from sources within the market and on our understanding of legislation and government press releases at the date of publication which we believe to be reliable and accurate. Neither Mercer nor any of its related parties accepts any responsibility for any inaccuracy.

Copyright 2025 Mercer (N.Z.) Limited.  All rights reserved.

27 May 2025