What is KiwiSaver?

KiwiSaver launched on 1 July 2007 and has become the primary retirement savings vehicle for most New Zealanders. The scheme is administered by IRD, which collects contributions alongside PAYE and forwards them to the employee's chosen KiwiSaver provider.

**Auto-Enrolment** New employees aged 18 to 65 who are eligible to join are automatically enrolled when they start employment unless they are already KiwiSaver members. They have a window of 56 days to opt out if they choose not to participate. Employers must provide opting-out information in writing at the time of engagement.

**Employee Contribution Rates** Employees can choose to contribute 3%, 4%, 6%, 8% or 10% of their gross wages. The minimum is 3% but employees can elect a higher rate at any time. They can also apply for a savings suspension (previously called a contributions holiday) after 12 months of membership if they face financial hardship, or permanently once they reach 65.

**Employer Contributions and Rate Increases** Employers must contribute at least the compulsory rate on each employee's gross wages. The rate has historically been 3%. From 1 April 2026, the compulsory employer rate rises to 3.5%, and it rises again to 4% from 1 April 2028. Employer contributions do not count toward the employee's elected contribution rate and are additional to gross wages.

**Employer Superannuation Contribution Tax (ESCT)** Employer KiwiSaver contributions are subject to ESCT, a tax withheld before the contribution is passed to the KiwiSaver provider. The ESCT rate depends on the employee's total gross salary and employer contributions: for earnings under NZD 16,800 the rate is 10.5%; between NZD 16,800 and NZD 57,600 it is 17.5%; between NZD 57,600 and NZD 84,000 it is 30%; above NZD 84,000 it is 33%. Employers deduct ESCT from the contribution before remitting to IRD.

**Employer Deductibility** Employer KiwiSaver contributions (including the ESCT withheld) are fully deductible as a business expense. This means the net after-tax cost to the employer is lower than the headline rate suggests.

**First Home Withdrawal** Members who have been in KiwiSaver for at least three years can withdraw their savings (excluding government contributions) to purchase a first home. This is one of the key incentives for younger workers to participate.

**Retirement Withdrawal** Members can withdraw their entire KiwiSaver balance at age 65 (the NZ Superannuation entitlement age). From that point, employer contributions are no longer compulsory, though employees and employers can continue voluntary contributions.