KiwiSaver employer contributions: 3.5% now, 4% from 2028

KiwiSaver used to be a stable, predictable on-cost: 3% on top of wages for most employees, year after year. That changed in 2026. The default rate has stepped up and will step up again, more young employees now qualify, and the rules around temporary reductions add a wrinkle to payroll. For employers, the change is modest per person but meaningful across a team and over a few years.

What changed on 1 April 2026?

Change	Before	From 1 April 2026	From 1 April 2028
Default employee contribution	3%	3.5%	4%
Minimum compulsory employer contribution	3%	3.5%	4%
Employer contributions for 16 and 17-year-old members	Not required	3.5% (if other requirements are met)	4%
Temporary rate reduction option	Not available in this form	Employees can stay at 3% for 3 to 12 months, renewable	Expected to continue

Inland Revenue’s employer guidance states the lowest rate for the employer contribution is 3.5% of the employee’s gross salary or wages, unless the employee is on a temporary rate reduction.

Who do you have to contribute for?

Employer contributions apply to employees aged 16 and over and under 65 who are members of KiwiSaver or a complying fund. From 1 April 2026 that includes 16 and 17-year-olds who meet the other requirements, a change that matters for hospitality, retail and horticulture employers with younger staff.

How is ESCT handled?

Employer superannuation contribution tax is tax on the employer’s contribution. It’s deducted from the contribution and paid to Inland Revenue with your other employer deductions by the due date: the 20th of the following month for small employers. The ESCT rate depends on the employee’s earnings. Alternatively, you and the employee can agree to treat the contribution as salary or wages taxed under PAYE. Most payroll software handles the calculation; what matters for budgeting is that the gross employer contribution is the cost to you. See PAYE and payday filing for the payment timetable.

What does the change cost?

Illustrative example. A Hawke’s Bay orchard business has 14 permanent staff on average gross pay of $56,000, all KiwiSaver members, and no one on a rate reduction.

	At 3%	At 3.5%	At 4% (from 2028)
Employer contribution per employee	$1,680	$1,960	$2,240
Across 14 staff	$23,520	$27,440	$31,360
Increase on 3%		+$3,920	+$7,840

On top of that come any seasonal workers who are KiwiSaver members. The 2026 rise added just under $4,000 a year to this business’s costs, and 2028 will add the same again, before any wage increases, which also lift the contribution because it’s a percentage of gross pay.

How do temporary rate reductions affect payroll?

Employees can apply for a temporary rate reduction to keep contributing at 3% for between 3 and 12 months, and can renew it. While it’s in place, the employer’s minimum contribution follows the reduced rate. That means payroll needs to track each employee’s rate and the end date of any reduction, so contributions step back up at the right time. Good payroll software flags these automatically; if you run payroll manually, keep a simple register.

Can contributions come out of a salary package?

Some employers offer total remuneration packages that include the compulsory employer contribution. That’s allowed by agreement, with two conditions in Inland Revenue’s guidance: the employee’s take-home pay shouldn’t be lower because of the compulsory contributions, and they must still receive at least the minimum wage once the contribution component is excluded. If you’re moving existing staff to this approach, take advice, because changing employment terms requires agreement.

How do you build KiwiSaver into prices and budgets?

• Include it in the true cost of every role. Our true cost of an employee page shows where it sits.
• Plan for 2028 now. If you sign multi-year contracts or fixed-price work, price in the 4% rate for work delivered after 1 April 2028.
• Reprice each April. KiwiSaver changes land on the same day as the minimum wage; see repricing after the minimum wage rise and the April cost reset.

What are the common KiwiSaver payroll mistakes?

A few errors come up again and again, and each one creates a liability to fix later:

• Not updating the rate on 1 April. Payroll settings left at 3% after 1 April 2026 under-contribute for every enrolled employee who isn’t on a reduction.
• Missing 16 and 17-year-olds. Younger staff who are members now qualify for employer contributions if they meet the other requirements.
• Calculating on the wrong base. Contributions are a percentage of gross salary or wages, so they should be calculated on gross pay, including taxable allowances and overtime that form part of it.
• Forgetting reduction end dates. When a temporary reduction ends, contributions must step back up.
• Paying late. Contributions are paid with the other employer deductions by the due date, not when convenient.

A quick reconciliation each April, comparing every employee’s contribution rate with their status, catches most of these.

When on-costs rise faster than revenue

A single KiwiSaver step is manageable. Combined with wage increases, ACC and a growing team, on-costs can outpace revenue for a period. If you’re planning to grow headcount and want working capital behind the plan, you can check what’s possible without a credit check.

Growing the team, sensibly funded

When the plan is sound and the timing is tight, talk to us. We look at unsecured options for trading businesses, sized on turnover and bank statements, and loans secured on residential or commercial property. There’s no credit check to enquire, your details aren’t spread around other lenders, and a real person reads your enquiry. Please fill in the form accurately so the first call can be genuinely useful. Start your enquiry.