Budget 2025:
What this means for your KiwiSaver

Budget 2025 sparked concern among KiwiSaver savers. Lower government top-ups? Higher contributions? No help for high earners? Here’s what’s really going on—and why KiwiSaver may still be your best long-term investment.

What’s Changing From 1 July 2025?

What’s New for 16–17-Year-Olds?

Before:

• No employer contributions
• No government top-up (MTC)

From July 2025:

• Eligible for the government contribution (MTC)
• From 2026, employers will also be required to match contributions for teen workers

Example:

A 17-year-old contributing a minimum of $1,042 per year could receive ~$261 from the government and a close to match from their employer annually — a powerful head start.

Over time, even small early regular contributions can compound into significant long-term savings ~$100,000 over 30 years.

Government Contribution is Halving

Yes — the annual government top-up is reducing from $521 to ~$261.

That’s $260/year less in support; it hurts, but that’s not the whole picture, because you and your employer will be putting in more. Total KiwiSaver contributions are still increasing.

Let’s break it down for someone earning $60,000/year.

Before:

• You contribute: $1,800/year (3%)
• Employer: $1,800 – ESCT = ~$1,260 (30% assumed ESCT)
• Govt (MTC): $521
• Total added annually: $3,581

After (from 2028):

• You contribute: $2,400/year (4%)
• Employer: $2,400 – ESCT = ~$1,680
• Govt (MTC): $261
• Total added annually: $4,341

That’s an extra ~$760/year added to your KiwiSaver, even with a lower government top-up.

Year-by-Year Growth: Old vs New Rules

Value at Retirement (Age 65)

*Assumptions in disclaimer

Even with a halved government top-up, you could finish $100K better off in retirement under the new rules — simply because more money went in.

What That Extra $100K Could Mean

That additional $100,000 at retirement could give you:

• $4,000 per year for 25 years
• All on top of NZ Super if eligible

That’s money for a holiday, to leave a legacy for your kids, cover future health costs, create a safety buffer, enjoy a more comfortable retirement, or simply have more choices in life!

What About High Earners ($180k+)?

Even without the government contribution, KiwiSaver still holds major value:

• Employer contributions up to 4% (before ESCT)
• Tax-efficient growth via the PIE regime (lower than top marginal rates)
• Compounding over decades with little admin

If you’re a high-income earner, KiwiSaver may not be your only retirement savings tool, but it’s still one of the most efficient places for long-term compounding.

Final Thoughts

Halving the government contribution feels like a step back. But the big picture shows KiwiSaver being rebalanced:

• More from you
• More from your employer
• Still tax-efficient under PIE rules
• Still growing long-term
• Still the #1 retirement tool for most Kiwis

What Should You Do?

• Keep contributing
• Review your fund
• Get advice if unsure
• Encourage teens to join early

KiwiSaver remains one of the easiest ways to turn your $1 into many multiples more over time, with help from your employer, government, and compounding.

Even with less government support, your contributions and time in the market still make KiwiSaver a powerful tool. Stay the course — your future self will thank you.

Important Disclaimer:

The projections and scenarios provided are for illustrative purposes only. They are based on assumptions that may not reflect actual outcomes. Past performance is not indicative of future returns. Please consult a licensed financial adviser for personalised advice.

Assumptions: Age: 25, Retirement: 65, Earning: $60,000/year throughout. Contribution: Minimum 6% p.a. return (before fees and taxes), Regular contributions, High growth fund assumption, Assume you retire at 65 and draw an income until age 90.