Helpful Article · May 2026

Why the Government Contribution to KiwiSaver is Still Worth It

From July 2025, the annual government contribution was decreased to 25 cents for each dollar a member contributes – the maximum top-up will be $260.72.

What’s a mere $260.72 worth anyway? It might not seem like much, but thanks to compounding returns over time, it can still add up to quite an impressive sum.

If you contributed enough to get the government contribution every year from age 30–65 and were in an aggressive fund, you could have approximately $137,873.38 by the time you withdrew at age 65 (ignoring tax and inflation). That’s even if you only made the minimum $1,042.86 contribution each year and never made any additional contributions via wages or salary, nor got any employer contributions.

To put the spotlight just on the amount the Government puts in (setting aside the $1,042.86 contribution you’d have to make to trigger it ^[1]), this figure could potentially triple over the 35-year lifespan of the KiwiSaver investment. The Government’s $260.72 over 35 years is just over $9125.2, but it could be worth more than $27,575.10 at retirement thanks to returns at an assumed rate of 5.5%, which compound over time. Again, we’ve ignored tax and inflation, to keep it simple.

Smart savers don’t miss out

As these calculations show, the Government contribution to KiwiSaver is still of value, and KiwiSaver members will do well to try and achieve it every year they’re eligible.

However a report by financial advisory service National Capital ^[2] estimates nearly a million people are missing out on it each year.

More than 85 percent of Generate members received the Government contribution in 2024 – that was a bonus of almost $54 million ($53,945,801.84 to be exact.)

That high ratio has been a consistent trend, which Generate attribute to the power of advice. More than 90 per cent of its members have received a KiwiSaver advice session, which keeps them informed and empowered to maximise their KiwiSaver investment.

With markets in an era of volatility, KiwiSaver investment returns can be very unpredictable. Even though it’s now reduced, a sure bet like the Government contribution is definitely still worthwhile.

Background – key changes to the Government contribution

The Government contribution has always been a key benefit of KiwiSaver, ever since the scheme launched in July 2007. The latest Government budget, delivered on May 22, cut this bonus in half.

From July 2025, the annual government contribution will be decreased to 25 cents for each dollar a member contributes – the maximum top-up will be $260.72.

Previously, there was an annual top-up of $521.43, if you contributed $1,042.86 to your KiwiSaver account between 1 July of the previous year and 30 June of the current year (so long as you met the eligibility criteria ^[3]). This was 50 cents to every dollar.

What’s more, those who earn over $180,000 per year will not receive the Government contribution at all. According to the IRD ^[4], as of 2024, 3.4% of wage and salary earners in New Zealand earned $180,000 or more, which is also when the top tax bracket kicks in.

These changes are expected to save the Government up to $3 billion over the next four years.

Assumptions

Calculations are based on an eligible KiwiSaver member contributing $1,042.86 per year from the age stated and receiving the full government contribution of $260.72 annually. Both contributions are assumed to be invested in an aggressive KiwiSaver fund, with an annual return of 5.5% (the government’s prescribed projection rate, which does not reflect Generate’s actual fund returns), compounded annually until age 65. Figures are for illustrative purposes only and do not account for fees, tax, or inflation.

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