Hon Nicola Willis
Minister of Finance

Changes to KiwiSaver in Budget 2025 mean young people today will retire with more savings and more financial security, Finance Minister Nicola Willis says.

“Using the Sorted website’s comparative calculator, you can see that with the Government’s KiwiSaver changes an 18-year-old today earning $48,000 a year, and investing in a balanced fund, will have almost $900,000 in KiwiSaver at age 65. Under the old settings, it would have been about $721,000.”

Changes to KiwiSaver in the Budget include extending the government contribution - and employer matching - to working 16 and 17-year-olds, as well as changing the default contribution rate to 3.5 per cent on 1 April 2026 and then to 4 per cent on 1 April 2028. People will have the option to stay on 3 per cent if they choose.

“An increased contribution rate will also grow the funds available to young people for a first home deposit. Kiwis are able to withdraw from their KiwiSaver to purchase a first home, and larger fund balances can only help,” Nicola Willis says.

“An increase in KiwiSaver balances will also grow the pool of funds available for investment in New Zealand. KiwiSaver schemes already invest around 40 per cent of their funds in New Zealand based assets – including housing developments like the Simplicity one we’re visiting today. With greater Kiwi savings, more Kiwi projects like this will be possible.

“That’s good for the economy, and a strong economy ensures a better future for all New Zealanders – including young people.

“I want to encourage New Zealanders to find out how our KiwiSaver changes will boost their balance. People should visit the sorted.org.nz website to see what it means for them. It’s impressive how a small change in contributions can make a major difference to people’s first house deposit or retirement nest egg.

“Since Budget Day, thousands of people have already checked out what the changes mean for them. I urge more people to do so.

“A better life for Kiwis young and old is what it’s all about – that’s what we’re delivering with the Growth Budget – a responsible Budget that secures New Zealand’s future.”

Notes:

1. The 18-year-old’s KiwiSaver example had the following inputs:

• 18 years old
• Currently employed
• Current employer-matched contribution 3 per cent
• Investing in a balanced fund
• Salary: $48,000 (annual, paid weekly – slightly less than full time on minimum wage of $23.50 per hour)
• Result: About $895,104 at age 65. Without Budget 2025 changes it would be $721,176. The figure is not adjusted for inflation, but when it is, savings at retirement remain higher than under previous settings.

1. The calculator’s adjustments can be found at sorted.org.nz/how-these-calculators-work/. Wage growth is assumed at nominal 3.5 per cent growth per annum.
2. Further details about Budget 2025’s changes to KiwiSaver can be found here.

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