A fintech that provides accounting services for sole traders says National’s compulsory KiwiSaver policy risks “beating people” into a system that doesn’t actually meet their needs.
If elected, the party would make the investment scheme compulsory for all workers alongside incremental increases to the default employee-employer contributions. Self-employed workers would be required to contribute 4 percent of their income – at present their contributions are voluntary.
The policy comes about a year after the Government cut the maximum it would contribute to KiwiSaver balances itself.
Previously 50 cents for every $1 employees contributed was matched, up to a maximum of $521.43. As of July 1, 2025, this was halved to 25 cents for every $1, up to $260.72.
On Sunday at the party’s annual conference, National Party Leader Christopher Luxon announced that if re-elected it would implement a raft of changes to the KiwiSaver scheme.
As well as making the scheme compulsory, the proposal included automatic enrolment for every baby born in New Zealand as well as a $1500 Baby Boost payment, and a contribution into a parent’s scheme while they’re on paid parental leave.
National’s policy document outlining its latest proposals says: “Self-employed individuals would only be required to contribute the equivalent of the employee contribution. This means someone who is self-employed from 1 July 2028 will be required to contribute 4% of their income to their KiwiSaver (not the combined rate of 8%).”
Data compiled in accounting fintech Hnry’s late 2025 sole trader pulse check shows 46 percent of sole traders had either made KiwiSaver contributions in the current financial year, or were planning to. This compares with 78 percent of employed New Zealanders.
However, in the wake of the slashing of Government contributions, 28 percent of contributors planned to reduce payments and 4 percent intended to stop altogether.
James Fuller, Hnry co-founder, says: “When you couple this with the recent Budget changes that slashed the government contribution towards KiwiSaver by 50 percent you’ve then got this compounding issue where there is no longer an incentive for the sole traders to pay into their KiwiSaver … and there’s obviously no employer contribution.
“It feels like we’re trying to beat people into using a KiwiSaver system that doesn’t meet their needs, as opposed to looking at what would better meet the needs of the self-employed.”
National’s policy release has sparked concern over affordability, particularly for those on total remuneration packages for whom the entirety of the mandated rate hikes would disappear from their take-home pay.
Fuller says a number of self-employed workers are in effect in a low-income bracket and therefore should be included in this concern.
He points towards the 2024 report Improving the retirement savings of the self-employed, penned jointly by his company and the Retirement Commission, which lays out several strategies to boost participation and savings levels.
The report says “improved incentives and support” could include “higher government contribution matches for modest deposits, or other financial rewards that replicate the employer match available to traditional employees”.
“Such measures would especially help lower-income self-employed individuals who currently get the least from the scheme,” it says.
Fuller says there are also question marks hanging over how the latest proposals would work.
“The notion that, as Nicola Willis was saying, this is all about flexibility and choice, kind of flies out the window when you actually look at the reality of how self-employed people earn. How is that collection mechanism going to work, and is the net impact worth it? Inland Revenue already has the mandate to go out and collect taxes from New Zealand taxpayers.
“Are they now going to be the enforcement arm for mandatory KiwiSaver contributions to sole traders?
“We’ve very quickly gone from what used to be a carrot, which was the government contribution that actually encouraged a lot of sole traders and self-employed to contribute to their KiwiSaver, which they did.
“Once that carrot was removed a lot of people looked to go elsewhere, and now we’ve got the stick, which is ‘no, now you have to come back to KiwiSaver, even though you don’t want to’.
“I think it covers over what is a systemic gap in the way that KiwiSaver works. It is not well set up for the self-employed, which is what the Retirement Commission report said.”
BDO Tax Partner Alan Scott also has questions over how the change would work in practice.
“Will they contribute as part of paying provisional tax? If they’re GST registered there could be contributions when they submit and file GST returns to try and match cash flow, but for some sole traders who won’t be GST registered, how will KiwiSaver contributions be collected?
“That’s where the devil is in the detail.
“It probably needs to be kind of regular to avoid having to make lumpy contributions that people won’t be able to afford. But in terms of the collection mechanism, how will that be done?”
Scott also flags the Retirement Commission’s recommendation of increased incentives for the self-employed, which could “make the compulsion aspect a little more attractive or palatable”.
Speaking to media on Monday, Luxon said National’s expectation that sole traders contribute half of the combined rate was “pretty fair and reasonable”, referencing other countries where there were similar levels of compulsion.
Australia’s Superannuation scheme is compulsory for employees who are 18 or older, or under 18 and working more than 30 hours a week.
It is not mandated for the self-employed, but it is more attractive for sole traders than KiwiSaver because the tax treatment of such savings is more favourable than the way savings are taxed in New Zealand.
Michael Reddell, economist and former Head of Financial Markets at the Reserve Bank, says there are multiple points of difference: “Unlike Aus, NZS isn’t means-tested so the policy case from bringing the self-employed in isn’t strong.”
The proposal would also create pressure for small businesses and sole traders operating through company structures – which many do, due to lower company tax and limited liability structuring.
“Entrepreneurs starting out are going to greatly resent being forced to save in KiwiSaver when they believe they are building a good business and need every cent of cash now for that.”