Living Wage NZ vs KiwiSaver Deduction : Know Your Real Pay
What Is the Living Wage in New Zealand?
In New Zealand Living Wage NZ refers to the minimum income that a person needs to fulfill their basic needs. It is higher than minimum wage because it is the true cost of living, like rent, food, or transport, and others. The living wage in NZ is checked and updated every year. It makes sure that workers earn a good amount of money to live a decent life, not just a survive.
But if you’re earning a full living wage, then your actual take-home pay will be less because money is deducted for KiwiSaver.
In NZ, many employees don’t know how the KiwiSaver calculation affects their earnings. Here, we simplified it for you.
Gross pay: This is your salary before any deduction
Net Salary: This is your salary after all deductions, including tax and KiwiSaver
Where Does the Money Go?
You need to understand how much money you take home; you need to include all points that reduce your pay:
- KiwiSaver percentage: Usually 3%, 4% or above.
- KiwiSaver tax: It is taken from your boss and added to your KiwiSaver.
- KiwiSaver calculation: How much is deducted from your savings.
- Kiwi payments: money deducted regularly from your pay for KiwiSaver.
- Kiwi loans: if you have a loan, then money is automatically deducted from your pay.
KiwiSaver Deduction
KiwiSaver deduction lowers your net pay, but it’s a long-term benefit. It’s a savings plan for retirement where your money increases over time. And sometimes the government adds an annual contribution.Every dollar is important if you are earning the living wage in NZ
Choose the right kiwisaver is important, this means how much your salary you want to save it may be 3%,4% or above.
It is important to understand Kiwisaver tax . Let’s take an example: if the boss helps. Your boss adds some amount into your KiwiSaver account but government takes tax from this amount. It is important to check your payslip. It will shows:
- How much is going to kiwisaver
- If any loan or extra payment has been taken
- What’s your real take-home pay
Kiwisaver Change Budjet in 2025
In NZ Government has announced to do major changes in kiwisaver budjet to encourage savings and long-term financial securtiy. When you join kiwisaver, so you must choose how much of your salary you want to save.This is called the KiwiSaver contribution rate. You can choose 3%, 4%, 6%, 8% and 10% of your pay.
One of the biggest updates is to increase the contribution rate for both employees and employers
- From 1 April 2026, the default rate will rise from 3% to 3.5%.
- Then from 1 April 2028, it will increase again to 4%.
FAQs
No, 4% rule is the retirement planning usually, it starts after the age 65. After 65, you can access your full KiwiSaver savings .Before that age, you are in the saving phase not in spending phase.
Yes, you can withdraw more than 4%.
The inflated 4% rule means you can start to take 4% kiwisaver balance in your first year of retirement and then each year you have to slightly increase the amount of inflation.