2026 will be a defining year for KiwiSaver
Tuesday, 30 December 2025
ANALYSIS: It’s a big year for KiwiSaver, with some predicting the 2026 general election will be “a KiwiSaver election”.
Part of the Government’s savings drive has been cuts to KiwiSaver entitlements.
On July 1 it halved government contributions to people’s KiwiSaver accounts, saving itself $580 million in contributions in the 2025/26 fiscal year, rising to $649m in 2028/29.
The Government also announced it would start ratcheting up the “default” contribution to encourage people to save more to fill in the KiwiSaver hole its cuts would otherwise mean for people’s nest eggs when they finally came to retire.
But more changes are to come in 2026, which is shaping up to be a defining one for KiwiSaver.
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Higher contributions in 2026
On April 1, the default KiwiSaver contribution rate will rise to 3.5% of a person’s gross wages from 3% for both workers, and their employers.
People who do not want to save more than 3% can opt to carry on saving at 3%.
KiwiSavers will be able to apply for a temporary rate reduction for three to 12 months, as many times as they like, according to Inland Revenue.
A slow build-up will see contributions rise to 6% (or 12% if employer contributions are included) by 2032, assuming National can stay in government, but there are loopholes that are likely to mean many workers will miss out.
A fairer deal for young workers
When KiwiSaver was created, 16 and 17-year-old workers were left out. They could join, but their employers did not have to make employer contributions until they turned 18.
If you’re aged 16 or 17 and working (and meet eligibility requirements) you’ll qualify for employer KiwiSaver contributions from April 1, Inland Revenue says.
That should equate to a pay rise, as young workers contributing to KiwiSaver from their wages, qualify for employer contributions.
It should also increase the money some have available to put down as a deposit on a first home.
KiwiSaver as an election issue
KiwiSaver needs more reforms, but the current Government is unwilling to make them. The biggest reform needed is to close the “total remuneration” loophole under which employers can avoid making any employer contributions at all, unless the worker accepts a lower wage.
Labour had plans to close that loophole, which even former Commerce and Consumer Affairs Minister Andrew Bayly, a National Party stalwart, felt was unfair as it was originally meant to be for highly-paid executives, but was being forced on lower earners by employers keen on saving money.
But Labour didn’t get round to closing it before it lost power, and the issue still rankles.
Labour’s KiwiSaver policy is to be unveiled.
But other parties, including National and ACT, have already shown their KiwiSaver hand.
ACT is a KiwiSaver sceptical party, not convinced the creation of KiwiSaver has had much, if any impact on people’s savings, just shuffled it around.
NZ First is looking to supercharge Kiwisaver by making it compulsory, and moving contributions to 8% each for employers and employees, heading to 10% each. So a total of 16% and then to 20% of someone’s salary would eventually go to KiwiSaver.
To fund this, Peters says there would be tax cuts for employers and KiwiSavers.
Sam Stubbs, chief executive of Simplicity KiwiSaver, says: “This is clearly now a KiwiSaver election.”
AI uncertainty
The gush of AI stories served up to readers in 2025 included some predicting an AI bubble bursting on the world’s stock markets.
KiwiSaver schemes invest in a mix of shares, bonds and other assets like cash and property, though the mix varies depending on what funds people choose to invest in.
But when markets dip, so do the values of KiwiSaver funds that have share investments fall.
And AI is a meaningful part of KiwiSaver portfolios.
The three largest investments in ASB’s giant KiwiSaver Growth fund at the end of September were AI leaders Nvidia, Microsoft and Apple. They make up just over $7 of every $100 invested in the $7 billion fund, or around half a billion dollars, and that does not include its investment in other companies benefiting from the AI investment rush like Amazon and Alphabet (Google).
The three make up less of the $5.4b ANZ KiwiSaver Growth fund, but it was still $3 in every $100.
Market volatility, as sharp falls and rises in values are generally referred to, tends to increase savers making fund switches as some try to avoid losses and lock in gains.
Data shows most KiwiSavers, however, stick with their long-term fund choices, grit their teeth, and hold on through the tough times with faith that things will come right in the long term.