KiwiSaver changes employers must be ready for — 1 February 2026
From 1 February 2026 KiwiSaver members can apply for a temporary reduction to their employee contribution rate. This change affects payroll, onboarding and staff communications. Below is a plain-English guide for employers and payroll teams on what to do next.
Key change - temporary rate reductions
What’s new
From 1 February 2026, a KiwiSaver member can ask their scheme provider for a temporary reduction to their employee contribution rate.
When the provider confirms the reduction, payroll must apply the lower employee deduction from the member’s requested start date - provided payroll has the confirmation before the pay run that covers that date.
How this affects payroll
Payroll systems must accept and calculate temporary employee rates, show the changed rate on payslips and keep evidence of the provider confirmation.
If provider confirmation arrives after the pay run that includes the intended start date, the reduction may only apply from the next pay run.
Mid-pay or back-pay scenarios will need prorations - test these in your payroll environment.
How an employee implements the change (what to tell staff)
Apply to their KiwiSaver provider (or via myIR where available) for a temporary rate reduction.
Keep the provider confirmation or acknowledgement.
Provide payroll with written confirmation and the requested start and end dates before the relevant pay run.
Check the first payslip with the reduced rate and keep a copy of all communications.
Other KiwiSaver obligations employers must manage
Alongside the 2026 change, these standard KiwiSaver obligations remain essential.
Automatic enrolment & opt-out window
Eligible employees are auto-enrolled under KiwiSaver rules. Employees who are auto-enrolled have a short opt-out window early in employment - ensure onboarding packs explain enrolment and opt-out steps.
Employee contribution deductions
Deduct the employee’s chosen KiwiSaver rate from gross pay and remit it to the scheme. Employees can change their chosen rate, and providers can notify employers of changes - payroll must accept and apply these.
Employer contributions
Employers must pay the legislated employer contribution for eligible employees. Confirm the current employer contribution rate with IRD and ensure payroll calculates it correctly.
Payslips & record-keeping
Payslips should clearly show the employee KiwiSaver deduction and the employer contribution. Keep records of employee requests, provider confirmations and any correspondence for compliance.
Timing, leaving employment and transferred settings
Late provider confirmations may delay application of a reduced rate until the next pay run.
If an employee leaves while a temporary reduction is active, check with the provider and the new employer how the reduced rate carries over or ends.
Communication is essential
Clear, short guidance to staff - how to apply, who to send confirmations to, and what to expect on the payslip - avoids errors and reduces admin.
Quick checklist for payroll and HR teams
Update payroll software to accept temporary employee rates and show them on payslips.
Create a process for receiving, storing and applying provider confirmations.
Update employment packs and onboarding to explain temporary-rate requests and auto-enrolment rules.
Test common scenarios - mid-pay starts/stops, back pay and multiple changes within a pay period.
Train payroll and HR staff, and prepare short templates for staff communications and acknowledgements.
Consider budget and reporting impacts if a number of staff reduce their contributions.
Employer FAQ
Who tells payroll about the reduced rate?
The employee provides payroll with the provider confirmation (or proof of application) and the start/end dates so payroll can apply the reduction.
When does the reduction take effect?
It takes effect on the date agreed between the member and their provider, provided payroll has confirmation before the pay run that covers that date.
Do employer obligations change?
No. Employers still need to calculate and remit employer contributions and follow enrolment/opt-out rules. The new requirement is a process for handling temporary employee rates.
Need help?
If you’d like Konnect Koncepts to manage the change, we can update payroll settings, run tests, draft staff comms and provide a payslip checklist for your team.
Official guidance
For full details see:
IRD - Temporary rate reduction:
https://www.ird.govt.nz/kiwisaver/kiwisaver-individuals/making-changes-to-my-kiwisaver/changing-my-kiwisaver-contribution-rate/temporary-rate-reductionKiwiSaver information:
https://www.ird.govt.nz/kiwisaver
Published by Konnect Koncepts - outsourced HR, recruitment and payroll for small to medium businesses.
