KiwiSaver Default Rose to 3.5% in April 2026; 4% Follows in 2028

The KiwiSaver default contribution rate rose from 3% to 3.5% on 1 April 2026, and rises again to 4% on 1 April 2028. Both steps were set in Budget 2025 and are already law under the Taxation (Budget Measures) Act 2025.

If you want to carry on contributing at 3%, you still have to apply for a temporary rate reduction. The step from the 3% default to 3.5% is automatic — IRD moves you unless you opt out. The two-step timetable means the gap you’re opting out of is half a percentage point, not the full point a single-stage move to 4% would have meant.

The two-step timetable

The two-stage timetable is now: Stage 1 (3% → 3.5%) effective 1 April 2026, Stage 2 (3.5% → 4%) effective 1 April 2028. Schools also receive Crown funding to cover their increased employer contributions.

What this means for existing members

If you were contributing at the 3% default, you were moved to 3.5% automatically on 1 April 2026 — your contribution and your employer’s. IRD’s wording leaves no room: “If you’re contributing at the default rate of 3%, this will automatically rise to 3.5% for both your contribution and your employer’s. Your employer will deduct 3.5% from 1 April (unless you apply for a temporary rate reduction). You do not need to do anything.” The new rate applies to every pay day from 1 April, even when the pay period straddles the date.

If you had already elected a higher rate — 4%, 6%, 8% or 10% — your own contribution doesn’t change. Your employer’s rises to the 3.5% minimum if it was sitting at 3%.

The split is therefore default rate vs elected rate, not new member vs existing member. Stage 1 matters to three groups:

1. Existing members on the 3% default — deductions rose to 3.5% on 1 April 2026 unless they applied for a temporary rate reduction.
2. New employees auto-enrolled on or after 1 April 2026 — their default deduction is 3.5%, not the old 3%.
3. Employers — must lift their match to at least 3.5% from 1 April 2026, and again to at least 4% from 1 April 2028.

What if you’ve already applied for a temporary rate reduction?

If you applied for a temporary reduction before the 1 April 2026 rise, three things to know:

• The reduction is still valid. IRD didn’t retroactively cancel the carve-out. You’re held at 3%, and you still needed it — without it the 3% default would have stepped you up on 1 April.
• But the cash-flow benefit is half what you expected. You’re at 3% against a 3.5% default — a 0.5-percentage-point gap, not the 1.0-point gap a single step to 4% would have meant.
• It lapses. A reduction runs for the period you ask for, from 92 days to 1 year, and then resets you to the default rate. You can re-apply as many times as you like, but nothing renews itself.

On a $70,000 salary the 3% vs 3.5% gap is $350/year ($6.73/week); against a 4% default it would have been $700/year ($13.46/week).

Renew the reduction if you still need it. Let it lapse and revert to 3% (now matching the lower end of the new default range) if cash flow has stabilised.

What if you want to lock in 4% voluntarily today?

You don’t need to wait for the 2028 step — you can elect 4% (or 6%, 8%, 10%) right now. Use the KS2 form with your employer or the rate-change function in myIR. Higher voluntary rates capture more compound growth and, if your employer offers tiered matching above the statutory floor, may unlock a higher employer contribution too.

Quick maths on $70,000 gross at 4% vs the new 3.5% default:

Each step up is taxable as Employer Superannuation Contribution Tax (ESCT) on the employer portion only — your personal contribution comes out of after-tax pay.

Who benefits most from the two-step timetable

Households on tight cash flow get two years before the next mandatory uplift. The 2028 step is already law, so only Parliament could change it.

For employers, especially small businesses, the two steps space out the labour-cost increase: 0.5 percentage points in 2026, then another 0.5 in 2028, instead of a 1.0-point hit in 2026 alone.

For the Crown, the staging matters less — total fiscal cost of KiwiSaver subsidies (MTC + tax credits) is dominated by the halving of MTC that Budget 2025 enacted, not the rate-step timing.

What stays the same

• Government member contribution at $260.72/year (halved from $521.43 in Budget 2025; no restoration).
• $1,042.86 personal contribution threshold to claim the full $260.72.
• First-home withdrawal rules unchanged.
• Retirement age for KiwiSaver access at 65.
• Hardship withdrawal grounds unchanged.

Practical timeline

• Now: nothing to do if you’re on 3.5%, 4%, 6%, 8%, or 10% — your rate continues. If you want to be at 3%, apply to IRD for a temporary rate reduction; it is never automatic, and it expires after at most 12 months.
• 1 April 2026: members on the 3% default moved to 3.5% automatically (both sides); new auto-enrolees deducted at 3.5%; employer match rises to 3.5%; 16-17 year-olds become eligible for compulsory employer contributions.
• 1 April 2028 (next scheduled): default and employer minimum both move to 4%. Existing 3% / 3.5% contributors auto-move unless they apply for a temporary rate reduction at that point.

Tools to model the impact

• KiwiSaver Calculator — full breakdown at any rate
• KiwiSaver 3% vs 4% Calculator — direct rate comparison
• Take-Home Pay Calculator — net pay at each KS rate
• KiwiSaver Government Contribution Calculator — whether you hit the $1,042.86 trigger at your contribution rate

Bottom line

The 1 April 2026 step is 3% → 3.5%, not 3% → 4%. If you were on the 3% default you were moved across automatically and didn’t have to do anything; if you’d chosen a higher rate, your own contribution was untouched. Staying at 3% is the one option that requires action: apply for a temporary rate reduction. The case for doing so is weaker now that the gap to default is 0.5 percentage points instead of 1.0. Save the calendar reminder for 1 April 2028, when Stage 2 actually lands.

For the full Budget 2026 personal-finance picture see the NZ Budget 2026 summary and the Budget 2026 hub.