KiwiSaver: Why Employers Need to Pay Attention Now
Written by Cherilyn Walthew
KiwiSaver is becoming much more than an employee benefit. For employers, it is increasingly part of the conversation about pay, retention and the future cost of employing people.
New Zealand is ageing. The Retirement Commission has previously projected the ratio of workers under 65 to people over 65 falling from around 4:1 to 2:1 over a 20-year period. It also noted that one third of New Zealand’s workforce was already aged 55 or over.
That has some fairly obvious implications for employers. Skills will become harder to replace, experienced workers will become more valuable, and retaining good people is likely to matter even more than it does now.
KiwiSaver is now an election issue
KiwiSaver has become a clear election issue in 2026.
Political parties are debating higher contribution rates, compulsory participation, employer contributions and how the scheme should work in the future.
The details differ, but the broader direction is hard to miss: retirement saving is likely to become increasingly important, and employers are likely to have a bigger role in it.
There is a retention issue here too
The Retirement Commission found that many businesses were already concerned about the effect of an ageing workforce and skill shortages, yet most had no specific strategy for recruiting or retaining workers aged 50 and over.
That is worth thinking about.
When good people become harder to replace, remuneration becomes about more than salary. Employees look at flexibility, culture, development opportunities and the overall value of working for an employer.
KiwiSaver can be part of that package.
A genuine employer contribution helps an employee build something for their future. Employers who communicate that value well — or choose to contribute more than the minimum — may find it becomes another useful retention tool.
Losing an experienced employee can cost considerably more than recruitment fees. There is lost knowledge, reduced productivity and the time required to get somebody new fully up to speed.
Why total remuneration is under scrutiny
This is an area employers should watch carefully.
Some employment agreements use a total-remuneration approach, where the employer’s KiwiSaver contribution is included within the employee’s overall remuneration package.
For example, an employee might have a $100,000 total package inclusive of the employer KiwiSaver contribution.
The issue arises when compulsory employer contributions increase. Under this model, the extra KiwiSaver contribution can effectively come from the employee’s existing package rather than being an additional employer cost.
That can undermine the policy intention of increasing employer support for retirement savings.
This is why banning new total-remuneration KiwiSaver arrangements has become part of the election debate.
Employers using this model should be thinking about what a law change could mean for payroll costs and future remuneration structures.
Look ahead, not just at the next pay round
There is no need to rewrite agreements because politicians are discussing change.
But there is good reason to review how your agreements deal with KiwiSaver, understand the potential future cost, and think about retirement saving as part of your retention strategy.
With an ageing workforce and fewer workers supporting a growing retired population, keeping skilled people will matter.
Helping employees build financial security may increasingly be part of keeping them too.
If you are reviewing remuneration structures or updating employment agreements, KiwiSaver is worth including in the conversation. EASI NZ can help employers work through the employment relations implications and make sure their agreements reflect the approach they intend to take.
