Guide

KiwiSaver employer contributions: the 3.5% minimum and ESCT

Updated 2026-08-15

For most employers KiwiSaver is the single biggest statutory cost on top of salary. The mechanics are simple; the details, ESCT, opt-outs and the scheduled rate rises, are where budgets go wrong, and this KiwiSaver employer guide takes each in turn.

Talk to a specialist Salary, KiwiSaver, ACC and holiday pay, itemised in ten seconds.

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: employer contributions to KiwiSaver). 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 rate for both employee and employer rose from 3% to 3.5% on 1 April 2026 and rises to 4% from 1 April 2028 (ird.govt.nz: KiwiSaver changes). An employee can apply for a temporary rate reduction to keep contributing at 3% for between 3 and 12 months, renewable, and the employer may then match at 3%. If you are budgeting beyond April 2028, model 4%.

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. 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.

Employer KiwiSaver cost per salary at each rate
Gross salary	At 3.5% (current minimum)	At 4% (from April 2028)	At 3% (temporary rate reduction)
$50,000	$1,750	$2,000	$1,500
$70,000	$2,450	$2,800	$2,100
$100,000	$3,500	$4,000	$3,000

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.

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Questions, answered directly

What is the minimum employer KiwiSaver contribution?

3.5% of the employee's gross salary or wages, for members who are contributing. The minimum rose from 3% to 3.5% on 1 April 2026 and rises to 4% from 1 April 2028. If an employee has an approved temporary rate reduction to 3%, the employer may match at 3%.

Does ESCT increase the employer's KiwiSaver cost?

No. ESCT is deducted out of the employer contribution before it reaches the employee's fund, so a 3.5% contribution costs the employer exactly 3.5% of gross pay; the employee simply receives less than the headline 3.5% into their account.

Sources

Hiring in New Zealand? Know the full number first.

Salary, KiwiSaver, ACC and holiday pay, itemised in ten seconds.

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