KiwiSaver tweaks and a $1.5bn-a-year investment incentive lead a budget aimed at long-term growth in a slow economy
The 2025 Budget, dubbed "The Growth Budget," came with plenty of headlines, from health and defence spending to law and order. For advisers and their clients, the big-ticket items were KiwiSaver changes and the government’s new business tax break, Investment Boost.
While the budget didn’t throw any major surprises, its announcements will be very relevant to household financial planning, small business growth, and client conversations. And for mortgage advisers in particular, it offers some ways to engage clients on broader financial wellbeing – from first-home savings to small business clients investing in growth.
KiwiSaver: more saving, less subsidy
One of the most widely anticipated changes was to KiwiSaver, where the government is hiking the default contribution rate from 3% to 4%, phased in over three years. Employees will still be able to opt down temporarily, but only if they actively choose to do so.
Meanwhile, government contributions are being halved – from 50 cents to 25 cents for every dollar contributed – while those earning over $180,000 will stop receiving the government contribution altogether. Eligibility for KiwiSaver will also be extended to 16- and 17-year-olds.
Nick Hakes, CEO of Financial Advice New Zealand, said the moves are broadly consistent with what was expected, and in his view, a step in the right direction for long-term savings habits.
“Anything that encourages Kiwis to save and prepare for retirement from a younger age is a positive step,” Hakes told NZ Adviser.
“If there is means testing applied at the top end, this means that KiwiSaver changes are going to impact all families and individuals. From our perspective, there’s never been a greater need to go and seek quality professional advice to understand how those changes impact families.”
Ryan Edwards, managing director at The Adviser Platform sees this as a moment to bring financial conversations to the surface.
“Mortgages, insurance, and KiwiSaver are all vital parts of a financial well-being toolkit,” Edwards said.
“Newspaper headlines and water cooler discussions are a brilliant way to boost awareness and help advisers start conversations about the impact of advice. At the end of the day, anything that starts or increases conversations about financial literacy is a good thing, as it's the first step in the journey towards financial wellbeing.”
Boost for small business, “magnifying glass” surplus
The other major announcement was the new Investment Boost scheme – a tax deduction that allows businesses to write off 20% of the value of new productive assets in the same year they’re bought, on top of standard depreciation.
FANZ CEO Nick Hakes described the move as “prudent and pragmatic” for small businesses trying to grow sustainably, and noted that FANZ will be looking at how this could affect adviser businesses specifically.
“On the surface, if you’re a small advice business, the investment boost will have a very positive impact,” Hakes said. “That also has a flow-on effect on the economy, because they are also employers. It’s an area we need to dig deeper into, and we’ll be working through what that means for advisers over the next few days.”
Kiwibank, however, has taken a slightly more cautious tone. While acknowledging the boost to business cash flow, its economists described Budget 2025 as “a growth budget in a shrinking world.” It noted the government is banking on productivity gains that have been elusive in the past, and flagged that weak global trade and tariff wars are dragging near-term growth expectations lower.
It also highlighted that the 2029 surplus would be relatively minor, with the potential for debt to rise further over the next four years.
“The operating surplus is still achieved, on paper, in 2029 – at the very end of the projections – but to an amount that needs a magnifying glass to see on a chart ($200mil or 0.0% of GDP),” Kiwibank said in its latest economics release. “The weaker reality means more debt.”
The overall tone of the Budget is one of discipline and restraint, with the operating allowance capped at $1.3 billion – the lowest in a decade. Critics have said it lacks short-term hits and the pay equity controversy very much lingers, but Finance Minister Nicola Willis said it’s about “getting the books back in order” and laying groundwork for future growth. That framing fits the narrative mortgage advisers have been working with for the past year: rising costs, tighter cash flow, and a growing need for long-term planning over short-term fixes.
