The National Party has announced an election policy to make KiwiSaver contributions mandatory for all workers from July 1st 2028, if re-elected to a second term.
Prime Minister Christopher Luxon revealed the billion-dollar package at the party’s annual conference in Lower Hutt today (Sunday 21st), signalling a massive strategy shift in New Zealand’s retirement savings scheme.
Proposed changes will see both employee and employer contribution rates gradually rise to a combined 12% by 2032, requiring a 6% input from each party.
The package also includes automatic KiwiSaver enrolment for babies born from July 2027 with a $1,500 government contribution, alongside mandated employer contributions for workers over the age of 65.
Speaking at the conference to their party faithful, Luxon said the policy aims to help New Zealanders build a bigger nest egg and retire with greater financial security. "In a more uncertain world, New Zealand needs higher savings and greater financial resilience. Compulsory KiwiSaver will help deliver both," he said.
Luxon noted that while many citizens already save, the changes would target those who currently miss out, including low-income workers and the self-employed.
Savers will only be allowed to halt their savings if they pass the strict financial hardship criteria currently used for early fund withdrawals.
The policy also introduces a government-funded contribution for parents on paid parental leave, matching the default rate.
Simplicity chief economist Shamubeel Eaqub said that while strengthening KiwiSaver is a positive step, the bottom 60% of income earners might struggle with a reduction in their weekly take-home pay.
Koura Wealth founder Rupert Carlyon also questioned how low-income families would manage the extra financial burden without specific tax incentives.
Financing the entire suite of changes will cost the government more than $1 billion over the next four years, with the initial rollout starting at $110.1 million in the 2027/28 financial year.
Much of the increased cost stems from the newborn kickstart payments and matching contributions for its own growing public sector workforce.
Let us know below - what are your thoughts on the policy announcement?
