Temporary Reduction Option for KiwiSaver Contributions
From 1 April 2026, the KiwiSaver default employee contribution rate will increase from 3% to 3.5%. This change is intended to help boost long-term retirement savings.
However, employees who are not ready for the higher contribution still have the option to temporarily reduce their contribution back to 3% for a period of 3 to 12 months.
Who Can Apply
Employees can apply for a temporary KiwiSaver contribution rate reduction directly through IRD via their myIR account.
Applications open from 1 February 2026.
Employees who currently have a KiwiSaver savings suspension cannot apply for this temporary reduction.
How Employees Can Apply
Employees need to complete the application themselves through their myIR account. The process is relatively straightforward:
- Log in to your myIR account
- Go to the KiwiSaver section
- Select “KiwiSaver Temporary Rate Reduction”
- Complete the required information and submit the application
- If approved, IRD will issue an acceptance letter
- Provide the approval letter to your employer
What This Means for Employers
If an employee is approved for the temporary reduction, their KiwiSaver employee contribution will return to 3% for the approved period.
Employers may choose to match the employee’s reduced contribution rate, but this is not mandatory.
Once the temporary reduction period ends, the employer contribution must return to the compulsory rate of 3.5%, or higher if your business contributes more.
From an employer perspective, the main step is to ensure the payroll system reflects the correct KiwiSaver rate once the employee provides the IRD approval.
Final Thoughts
These changes are part of the government’s gradual adjustments to strengthen KiwiSaver savings over time.
For businesses, the key is simply to stay aware of the changes and ensure payroll settings are updated correctly.
If you are unsure how these changes may affect your payroll setup or KiwiSaver contributions, feel free to reach out.