Many Kiwis missing out on KiwiSaver top-up, Westpac says
KiwiSaver members have until June 30 to ensure they receive the full $521.43 government contribution before changes announced in Budget 2025 take effect — and new data shows many New Zealanders have been missing out.
Over the last two years, 44% of eligible Westpac KiwiSaver members didn’t receive the maximum top-up, falling short of the required annual contribution of $1,042.86.
Contributions must hit the threshold
To qualify for the full top-up this year, KiwiSaver members must have contributed at least $1,042.86 between July 1, 2024, and June 30, 2025. The government will match contributions at 50 cents per dollar, up to a maximum of $521.43.
Nigel Jackson (pictured), chief executive of BT Funds Management — the provider of the Westpac KiwiSaver Scheme — said members who haven’t yet reached the threshold still have time to act.
“People who are in a financial position to top up their KiwiSaver contributions to $1,042.86 for the year should do so, to maximise their retirement savings for the year,” Jackson said.
Why many miss out
Jackson acknowledged that a range of circumstances can impact a person’s ability to meet the contribution threshold.
“There may be a variety of reasons why people haven’t contributed up to the threshold, for example, some members may be on parental leave, some may be working part time, or others may have temporarily suspended contributions,” he said.
“However, if people can afford to top up their contributions they should do so, as every dollar contributed up to the threshold has an immediate investment return of 50%.”
Budget 2025 brings KiwiSaver changes
While the current eligibility and matching formula remains unchanged for this year, budget 2025 will reduce the maximum government contribution, increase minimum contribution rates for employees and employers, as well as extend contributions to include 16- and 17-year-olds.
These changes align with growing calls from experts and industry leaders to raise the default rate from 3% to 4%, citing long-term benefits for retirement sufficiency.
Jackson said the changes will benefit long-term savers.
“The Retirement Commission estimates the changes will increase retirement saving for around 80% of contributing KiwiSaver members, which is a good thing.”
Kiwis still struggling to save
Despite the long-term benefits, Jackson said current economic conditions are making it tough for many New Zealanders to focus on retirement savings.
“While we know cost of living pressures mean many New Zealanders are currently finding it hard to focus on saving for retirement, every dollar they can put in now is an investment in their future financial wellbeing,” he said.
Recent research from Westpac showed more than 60% of New Zealanders don’t believe Kiwis are saving enough for retirement. Additionally:
- 70% said KiwiSaver should be compulsory
- 68% felt employers should increase contributions
- Only 44% supported higher employer contributions if it meant sacrificing a pay rise
Missed opportunities on the rise
According to Jackson, 2% more Westpac KiwiSaver members missed out on any government contribution in 2024 than in 2023, highlighting the growing impact of inflation and cost pressures.
The shortfall comes as the government considers changes to the $521 KiwiSaver subsidy, including possible means-testing. Providers are split, with some warning it could hurt engagement – especially among lower-income earners – while others say retargeting support could improve fairness.
But he urges eligible members not to give up on making contributions this year.
“No matter what stage in life you’re in, it’s always a good time to be thinking about saving for retirement,” Jackson said.
“Even if you can’t afford to contribute to your KiwiSaver account right now, it’s still worth thinking about your goals for retirement and how you’re going to get there, including whether you’re in the right type of fund for you and your stage in life.
“If you’re not sure about any aspect of your KiwiSaver account, come and talk to us.”
