KiwiSaver employer contributions: the 3% minimum and ESCT

The employer obligation

If an employee is a KiwiSaver member and contributing from their pay, the employer must contribute at least 3.5% of gross salary or wages on top (ird.govt.nz: KiwiSaver for employers). New employees are automatically enrolled and can opt out between days 14 and 56; while they are enrolled, contributions are due. No employer contribution is required for staff under 18, and contributions for those over 65 are generally voluntary.

Under the Budget 2025 changes, the default contribution rate for both employee and employer rose to 3.5% on 1 April 2026 and rises to 4% from 1 April 2028. Employees can apply to Inland Revenue to remain at 3%, in which case the employer may match at 3%. If you are budgeting for 2026/27 onwards, model 3.5–4%, and verify the current minimum on ird.govt.nz before setting pay rates.

ESCT: the tax inside the contribution

Employer contributions are not paid gross into the employee's fund: employer superannuation contribution tax (ESCT) is deducted first, at a rate set by the employee's earnings band (10.5% to 39%). ESCT does not change what the employer pays, a 3.5% contribution costs 3.5% of pay either way, but it does mean the amount landing in the employee's fund is smaller than the headline contribution. Some employers instead agree to treat contributions as part of a total remuneration package; that is lawful if negotiated in good faith, but it shifts the cost into the advertised salary rather than removing it.

Not every employee is a member: opt-outs and non-members reduce the real cost across a team, but budget as if every hire contributes, since you cannot control the choice. This page is general information, not financial advice; verify current rates on ird.govt.nz.