KiwiSaver in 2025: Budget Changes You Need to Know (And How to Benefit)
Published on November 1, 2023 by Duck Bell
The 2025 Budget has introduced several significant changes to KiwiSaver. Here's what you need to know and how to make the most of these adjustments to secure your financial future.
Key Changes at a Glance
1. Government Contribution Reduction
Starting 1 July 2025, the government's annual contribution will decrease from 50 cents to 25 cents for each dollar you contribute. This reduces the maximum government top-up you can receive from $521.43 to $260.72 per year.
2. Contribution Rate Increases
Default employee and employer contribution rates will rise in two stages:
- To 3.5% on 1 April 2026
- To 4% on 1 April 2028
This means more of your pay will go into your KiwiSaver, and your employer will match the higher rate.
3. Eligibility Changes for Young People
Eligibility for both employer and government contributions will be extended to 16- and 17-year-olds starting from 1 April 2026, encouraging earlier saving habits.
How to Benefit from These Changes
- Maximize Your Contributions: To get the new maximum government contribution of $260.72, you now need to contribute at least $1,042.86 annually (about $20.06 per week). Check your contributions to make sure you don't miss out.
- Adjust Your Contribution Rate: If your budget allows, consider increasing your contribution rate to align with the new defaults. This maximizes your employer's matching contribution and accelerates your savings.
- Review Your Fund Choice: With changing contribution dynamics, it's a perfect time to review your fund's performance and ensure it aligns with your long-term retirement goals and risk tolerance. A higher-growth fund might be suitable if you have a long time until retirement.
Conclusion
These changes present an opportunity to reassess and boost your retirement savings strategy. By staying informed and proactive, you can turn these new KiwiSaver settings to your advantage and stay on track for a comfortable retirement.