KiwiSaver Contribution Increases (From 1 April 2026)

From 1 April 2026, the default KiwiSaver contribution rate will increase from 3% to 3.5% for both employers and employees. This forms part of the Government’s staged uplift announced in Budget 2025, with a further increase to 4% scheduled for 1 April 2028.

For employees contributing at the default rate, this will directly increase employer payroll costs.

Temporary Contribution Reduction Option

To ease the impact on employee take‑home pay, a new temporary contribution rate reduction is available. From 1 February 2026, employees may apply to Inland Revenue to stay on the 3% rate for three to twelve months.

If approved:

• the reduced rate begins from the first pay period after 1 April 2026
• Inland Revenue will notify employers
• employer compulsory contributions also reduce during this period

This means employers may have staff on different contribution rates at any given time, making it essential to update payroll systems and internal processes.

Managing Cost Increases Through Total Remuneration

While the default legal position is that compulsory employer KiwiSaver contributions are paid in addition to an employee’s salary or wages, businesses can manage this cost increase through a ‘total remuneration’ approach.

This involves structuring an employee’s pay so that their salary package is inclusive of the employer’s KiwiSaver contribution. For this to be legally effective, the employment agreement must be explicit.

This allows businesses to forecast their total wage costs with certainty. Employers should review their current employment agreement templates and consider updating them for new employees, or negotiating a variation with existing employees, to reflect this approach.

Employer KiwiSaver Contributions for 16–17 Year-Olds

From 1 April 2026, employers will be required to make compulsory KiwiSaver contributions for employees aged 16 and 17, provided the employee is a KiwiSaver member.

Currently, compulsory contributions only apply from age 18.

Key points:

• Auto‑enrolment still begins at 18
• Contributions for 16–17-year-olds only apply if they opt in
• Industries such as retail, hospitality, and entry‑level services will be most affected

Businesses employing younger workers should factor these changes into payroll budgets from April 2026.

Minimum Wage Increase for 2026

The adult minimum wage will increase to $23.95 per hour from 1 April 2026, up from $23.50.

The starting‑out and training wage will rise to $19.16 per hour, remaining at 80% of the adult minimum wage.

For a full‑time minimum‑wage employee, this represents approximately:

• $18 more per week
• $936 more per year (before tax)

Employers with multiple minimum-wage staff should review labour budgets early and consider potential flow-on effects across pay structures.

Important: KiwiSaver cannot be used to meet minimum wage

An employee’s gross wages, before any Kiwisaver deduction or employer contribution, must meet or exceed the minimum wage for all hours worked. This applies even when a total remuneration package is in place.

HR Trends and Compliance Risks to Watch

Beyond the confirmed cost increases, a number of broader HR risk areas continue to draw regulatory focus:

• Holidays Act compliance – remains a priority, particularly around accurate leave calculations.
• Worker classification – is under ongoing scrutiny, especially where contractors or gig workers are used.
• Privacy, Workplace Monitoring and Flexible work practices – require clear policies and transparent communication, even where no new legislation is imminent.

Businesses should ensure policy frameworks and employment agreements are up to date to minimise compliance risk.

Preparing Your Business for 2026

With several employment changes taking effect within a short period, employers should proactively:

• update payroll systems for variable KiwiSaver rates
• review employment agreements
• communicate changes to employees
• budget for increased labour costs
• complete financial modelling ahead of the new financial year

Early preparation will help businesses maintain compliance, support workforce stability, and manage rising employment costs in 2026.