Effective 1 April 2026, the default KiwiSaver rate will increase to 3.5% for both employee deductions and employer contributions.
Here are some key highlights:
- From 1 February 2026, employees can apply to Inland Revenue for a temporary rate reduction to remain at 3%. This reduction can last between 3 to 12 months, with no limit on re-applications.
- Employers may choose to match the 3% reduction or continue contributing at the higher 3.5% rate.
- Employer contributions will now extend to include 16 and 17-year-old employees.
We are updating both Payroll and HR platforms to ensure a seamless transition:
- We are adding a new "Rate Reduction" section to the employee KiwiSaver screen. When an admin selects this checkbox, they can enter the "From/To" dates as specified in the Inland Revenue confirmation letter.
- Once dates are entered, both employee and employer rates will default to 3%. If an employer wishes to maintain the 3.5% contribution regardless of the employee's reduction, they can manually override the rate.
- For partners using external HR systems, a new API for rate reductions will be introduced.
These updates will go live in mid-March, allowing employers ample time to enter reductions before the 1 April effective date.
Automatic Rate Increases
Employment Hero will automatically apply the 3.5% increase on 1 April.
- The new rate is triggered by the Paid Date. Any pay run with a paid date on or after 1 April 2026 will use the 3.5% rate, even if the work was performed in March.
- If you create a pay run prior to 1 April but set the paid date for 1 April or later, the 3.5% rate will apply automatically - even if the employee’s screen still reflects 3% during the setup phase.
Enhanced Leave Without Pay (LWOP) Visibility
You can now display LWOP on payslips to improve transparency.
- We’ve introduced a new "Leave Without Pay" pay category linked to the two default leave types. A new "Unpaid Leave" checkbox in the Payment Setup ensures these hours appear on the payslip.
- If you prefer not to show LWOP, simply go to the leave category and select "Don’t pay for the leave taken" under Payment Setup.
Customisable YTD Totals
To reduce "noise" on payslips for businesses with numerous pay categories, you can now hide Year-to-Date (YTD) totals.
- Only the pay categories used in the current pay run will appear at the top.
- Navigate to Payslip Settings and uncheck "Show Year to Date total amounts."
Clearer Earnings Categorisation
Payslips will now display Taxable and Non-Taxable earnings in separate sections, making it easier for employees to distinguish between different income types.
