KiwiSaver Changes An Opportunity To Improve Retirement Outcomes For All – Pie Funds CEO

KiwiSaver changes announced in today’s Budget, including lifting the default employer and employee contribution rate to 4% and extending the government contribution to 16 and 17 year olds, mark a significant opportunity to boost retirement outcomes for more New Zealanders, says Pie Funds CEO Ana-Marie Lockyer.

Lockyer, a long-time advocate for improving New Zealanders’ retirement outcomes and improving equity in the system, welcomed the focus on targeting government contributions to younger KiwiSavers.

“I’m pleased Finance Minister Nicola Willis has listened and acted with the future in mind. Overall, these changes reflect the Government’s desire to ensure the sustainability of KiwiSaver and a comfortable retirement for all New Zealanders.”

Contribution rates need to reach 10%

The increase in minimum employer and employee contributions from 3% to 4% by 1 April 2028 is a step in the right direction - but Lockyer emphasised the need for this to eventually rise to a combined rate of 10%.

“A 10% combined contribution rate would help ensure a good standard of living in retirement, but we need to get there gradually,” she said. “I’m pleased to see the increases are phased and clearly communicated, so lower-income earners in particular aren’t discouraged from participating due to affordability concerns, and employees can plan ahead.”

Lockyer also emphasised the long-term national benefit of growing individual savings.

“The more New Zealanders save over time through KiwiSaver, the more we can offset the growing fiscal burden of superannuation on future governments.”

Encouragement for younger KiwiSavers

Lockyer backed making the government contribution available to 16 and 17 year olds from 1 July 2025 - while questioning why it wasn’t extended to older KiwiSavers still working.

“Thanks to the benefits of compounding interest, the earlier you start saving in life, the better your position at retirement will be. Providing more incentives to young people to save encourages stronger, more consistent contributions.”

“However, I would have liked the government contribution to be available to the increasing number of over-65s who are still working, whether by choice or necessity. They need support to save for their retirement, too.”

Lockyer also acknowledged halving the maximum government contribution to $261 from 1 July 2025.

“Even a reduced annual government contribution of $261 per year can grow to more than $41,000* over a KiwiSaver member’s working life. That’s life-changing support for many Kiwis.”

Focus must remain on outcomes

With KiwiSaver under increasing focus as balances grow, Lockyer stressed the system must continue to evolve to serve the retirement needs of a broader and more diverse New Zealand.

“KiwiSaver has gone from strength to strength since it launched in 2007, and we recognise today’s changes reflect the Government’s tough prioritisation decisions in a constrained fiscal environment. This is a moment to start reshaping KiwiSaver into a fairer, more effective tool that helps more New Zealanders retire with dignity.”

*Based on a 16 year old receiving the $261 government contribution to age 65 (not adjusted for inflation). Source: Sorted.org.nz

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