KiwiSaver Contribution Increase Coming – Are You Prepared?
From 1 April, the default KiwiSaver employer and employee contribution rate increases from 3.0% to 3.5%.
On paper, it’s a small adjustment. In practice, as an employer it means a slight shift in staff costs to consider, and for employees a small increase in deductions from your take-home pay going forward.
For most, this change will be processed automatically through payroll. You don’t need to do anything for it to take effect.
What you need to know as an employer
If you run a business, your employer KiwiSaver contributions will increase to a minimum of 3.5% (with no deferral available). If you are contributing more than the minimum, then no change is required.
Most payroll software providers will implement the change automatically, but it’s important to check your accounting or payroll software settings.
Clear communication with staff is also helpful. Employees should understand how the change affects their take-home pay and what options they have.
As an employer, ensure:
· From 1 April, your payroll systems are updated and checked
· That you’ve communicated this change with your employees
· You’ve considered whether the increase in staff costs has any wider implications for your business.
What does a 0.5% change really mean for employees?
For some, the increase will feel manageable. Over time, that additional 0.5% can make a meaningful difference to retirement savings. For others, even a small reduction in weekly cashflow can have an impact, particularly with ongoing cost-of-living pressures.
As an employee, your KiwiSaver contribution rate is ultimately your responsibility. If you are currently contributing at the default rate and would prefer to remain at the minimum 3% (this will be available for a limited time), you need to actively notify your employer (or your accounts team if you take a salary with KiwiSaver contribution as a business owner) and complete the required form.
If you’re an employee, ask yourself:
· Does the higher contribution still fit comfortably within your budget?
· Are you contributing at the right level for your long-term goals?
· Do you need to adjust your cashflow planning?
Small changes can compound over time in both positive and challenging ways. It’s worth taking a moment to review your situation.
Got questions still?
At Bennetts Proactive, we help business owners and individuals stay ahead of compliance changes like this. If you’re unsure how the KiwiSaver change affects you, your payroll, or your wider financial position, talk to our team.
Call us on 07 573 8446 or contact your usual Bennetts Proactive advisor for guidance.