What you need to know about KiwiSaver
KiwiSaver is designed to set your up for a comfortable retirement. With New Zealanders now living and working longer than ever before, it’s become even more important to ensure you have adequate savings to support you in retirement.
Many people assume that since KiwiSaver contributions happen automatically and they don’t need to do anything. However, taking an active role in Kiwi Saver accrual will help you save much more in the long run. Here’s what you should know.
What is KiwiSaver and is it different to superannuation?
KiwiSaver is a voluntary retirement savings and investment scheme to help people build their own retirement savings. All New Zealand citizens and permanent residents are eligible to join; however you can opt out.
Superannuation refers to the government pension. This is for retirees aged 65 or older and who meet certain criteria. Unlike KiwiSaver, superannuation doesn’t include any individual or employer contributions as it’s fully government-funded.
How does the KiwiSaver system work?
Employees enrolled in KiwiSaver choose to contribute a percentage of their pre-tax pay (3%, 4%, 6%, 8% or 10%) to their chosen KiwiSaver fund through payroll deductions. Employers also add a minimum of 3%, unless they have an exemption.
From 1 April 2026, the default contribution rates will increase to 3.5% for both you and your employer. You’ll be able to apply for a temporary reduction (back to 3%) for up to a year, which your employers might also match. From that date, employees aged 16–17 will also be eligible for the scheme.
Beyond this, you can choose to make extra contributions to your KiwiSaver. Each year, the government will pay up to $260.72 towards your retirement savings as long as you put in at least $1042.86 of your own money. “The more that goes in, the more you’re going to have at the end and the more benefit you get from compounding returns across your lifetime,” says Lynda Cross, Head of Guidance at Aware Super.
While the funds in your KiwiSaver are meant for retirement, you can make early withdrawals for certain reasons, like to buy your first home and in cases of serious illness or financial hardship.
KiwiSaver mistakes to avoid
Although KiwiSaver is paid automatically, that doesn’t mean you should ‘set it and forget it’. The biggest mistake Cross sees is not taking an active interest in your retirement savings. Many people put off contributing until later, not realising that small changes add up to thousands with compound interest.
Some common mistakes to avoid include:
- Thinking the default contributions are enough. Making extra KiwiSaver contributions adds up in the long run. Many people put this off while they’re young, which often leads to playing catch-up later, says Cross. She encourages people to start early, even if it's just a small increase to your chosen rate, to get the compounding growth over time.
- Sticking to the default options. While you can only be with one KiwiSaver provider, they usually have a variety of funds on offer, ranging from high-risk/high-growth funds to low-risk conservative options. The younger you are, the more time you have to ride out the ups and downs of higher-risk investments in exchange for a higher long-term returns, says Cross. Make sure you select the option that lines up with where you are now, what you want to achieve and your risk tolerance.
- Not paying yourself KiwiSaver (if you’re self-employed). People who are self-employed or sole traders don’t have to pay KiwiSaver, but that can leave you worse off when it’s time to retire. It’s still important to make contributions, says Cross, as there’s no guarantee your business will be enough.
- Assuming you’ll retire at 65. A lot of people end up retiring earlier than they planned, says Cross. Start thinking about your retirement balance and how much income it will provide well before your retirement date.
What to do if something isn't right
If you notice something is off, for instance if payments are missing, it’s best to act right away. “I recommend trying to resolve matters directly with the employer in the first instance,” says Rachael Judge, Employment Partner at Simpson Grierson. “If they have misunderstood their legal obligations, employers have an obligation to put things right.”
In some cases, you might need to escalate issues. There are two main options for employees.
The first is to file a personal grievance if your employer hasn’t met their KiwiSaver obligations. In this case, you could look to recover the losses from this, which includes the contributions as well as any interest.
“Alternatively, employees could report the matter to the Inland Revenue Department,” says Judge. “The IRD has the power to audit an employer’s payroll, issue penalties and take legal action to recover debt.”
Where to go for more information
For more information on your superannuation rights, visit the IRD website. Speak to your super fund or potentially seek legal advice for more specific advice relating to your circumstances.
