Labour will not promise to restore KiwiSaver government contribution

Labour leader Chris Hipkins says Labour cannot promise at this stage to reverse the cut to the government KiwiSaver contribution.

The contribution was halved in Budget 2025, from $521 a year to $260, and eligibility was limited to those earning under $180,000, according to RNZ. Labour's KiwiSaver package, released on Sunday, contained no commitment to return it to its previous level.

Speaking on RNZ Morning Report, Hipkins said there is a lot of pressure on any incoming government after the election. He would not give that commitment now.

The package centres on compulsory contributions rather than the Crown top-up. Labour would raise employer contributions to 6 percent. Employees could contribute at 4 percent and pause their own contributions if they wished, rather than being required to match 6 percent.

Labour would also ban new total remuneration packages, under which the employer contribution is treated as part of salary rather than paid on top of it.

Earlier detail released by the party set out a stepped path for the default rates, from 3 percent to 3.5 percent from April 2026, then to 4 percent by 2028. From 1 July 2028, employer contributions would become compulsory and would extend to paid parental leave and workers over 65, according to Labour. Employer contributions would continue even when employees reduced or paused their own contributions, as reported by the NZ Herald.

Hipkins framed the plan as continuity. "KiwiSaver is one of Labour's proudest legacies. We created it, and now we're going to make it work better for people."

On tax, Hipkins said Labour would set out its position on landlord interest deductibility in due course, after the Pre-election Economic and Fiscal Update later this month. He did not pre-commit ahead of PREFU.

Looking at what this means for the campaign, the sequencing is deliberate. Labour is willing to impose a rising compliance cost on employers through the contribution schedule while refusing to take on the direct fiscal cost of restoring the $521 credit before it has seen Treasury's books. That keeps its fiscal baseline tight into PREFU and leaves the government contribution as a second-term option rather than a first-Budget liability. For political staff, the points to watch are the interaction with wage negotiations around total remuneration, the treatment of over-65s and those on paid parental leave, and whether PREFU headroom changes the landlord deductibility call.