You can pause your KiwiSaver contributions with a savings suspension (often called a contribution holiday), or lower them with a temporary rate reduction to 3%. The two work differently: a suspension stops your contributions and usually your employer’s, while a rate reduction keeps both flowing at a lower level. This page covers who can use each, how to apply, and what each costs.
Savings Suspension and Temporary Rate Reduction at a Glance
| Savings suspension | Temporary rate reduction | |
|---|---|---|
| Your contributions | Stop | Continue at 3% |
| Employer contributions | Stop, unless your employment agreement says otherwise | Continue; your employer can choose to lower them to 3% |
| Government contribution | Not earned while suspended, unless you make voluntary contributions; contributions made earlier in the year still count | Earned on what you contribute, as usual |
| Length | 3 months to 1 year | 3 to 12 months |
| Who can apply | Members who have contributed for 12 months or more; earlier only with evidence of financial hardship | Can apply at any time, but not while on a savings suspension |
| Back-to-back? | Yes | Yes |
Sources: Inland Revenue, Taking a savings break, Temporary rate reduction and Employer contributions.
What Is a KiwiSaver Savings Suspension?
A savings suspension is a formal period during which your employee contributions are paused. Your employer stops deducting KiwiSaver from your pay, so your take-home pay rises by the amount that was being deducted.
It does not close your KiwiSaver account: your existing balance stays invested and continues to rise or fall with your fund.
Who Can Take a Savings Suspension
If you’ve been in KiwiSaver a year or more: all employees who have contributed and been a member for 12 months or more can have a savings suspension for 3 months to 1 year. You don’t need to give a reason, and you can have as many suspensions as you want, back-to-back.
If you’ve been in KiwiSaver less than a year: you can apply for an early savings suspension if you’ve made a KiwiSaver contribution and you’re experiencing, or likely to experience, financial hardship. Inland Revenue needs evidence of hardship for reasons outside your control, and an application may not be accepted if your circumstances changed for reasons within your control. The default early suspension is 3 months; depending on your circumstances Inland Revenue may give up to 1 year. Early suspensions are requested by contacting Inland Revenue.
The opt-out window when you are first automatically enrolled is a separate route: see opting out of KiwiSaver.
How to Apply for a Savings Suspension
- In myIR, go to your KiwiSaver account panel (on the homepage once you’ve logged in).
- Follow the prompts to complete your application.
Without a myIR account, you can request a savings suspension through Inland Revenue’s online service for non-myIR users.
The suspension begins on the date Inland Revenue approves it. You receive a notice with its start and end dates to show your employer; if you gave Inland Revenue your employer’s details, it also sends your employer a notice. Keep the notice: if you change jobs during the suspension you need to show it to your new employer, and if you can’t find it, deductions are required until you get a replacement letter from Inland Revenue (Inland Revenue, Apply for a savings suspension).
Ending a Suspension
You can start or stop your contributions at any time while you’re on a savings suspension by talking to your employer. If the change is within 3 months of the last change, your employer needs to agree.
Near the end of the suspension Inland Revenue lets you know. If you don’t apply for another one, it asks your employer to start deductions again.
What Happens to Employer Contributions?
While you’re on a savings suspension, you won’t get employer contributions unless your employment agreement states otherwise. For most people this is the largest cost of a suspension. The employer KiwiSaver contributions guide explains how the employer contribution and ESCT normally work.
What Happens to the Government Contribution?
The government contribution is worked out on your own contributions for the KiwiSaver year (1 July to 30 June):
- The full $260.72 needs $1,042.86 of your own contributions in the year
- Below that, you get 25 cents for each dollar you did contribute
- If you’re suspended for the whole year and contribute nothing, you get nothing
You can make voluntary KiwiSaver contributions directly to your provider during a suspension, and they count toward the threshold. The KiwiSaver government contribution guide sets out the other conditions.
The Cost of a One-Year Suspension: Worked Example
Illustrative example: one-year suspension at age 35, earning $75,000, contributing at the 3.5% default:
| Item | Amount |
|---|---|
| Your contributions not made (kept in your pay, before tax) | $2,625 |
| Employer contributions not received (before ESCT) | $2,625 |
| Government contribution not received (if you make no voluntary payments) | $260.72 |
| Total not added to your account | $5,511 |
| What that total could have grown to by 65 (30 years at an assumed 7% a year) | $42,000 |
Illustrative only, rounded. Returns are not guaranteed; actual outcomes depend on fund returns, ESCT and individual circumstances.
The Temporary Rate Reduction
Since 1 April 2026, you can apply to Inland Revenue to lower your KiwiSaver contribution rate to 3% for 3 months to a year, instead of the 3.5% default (Inland Revenue, KiwiSaver changes). It is the only way to contribute through pay at less than 3.5% without stopping altogether.
The rules (Inland Revenue, Temporary rate reduction):
- You can apply at any time, and you don’t need to wait for a current reduction to end: reductions can be taken back-to-back
- You can’t apply for a temporary rate reduction if you have a savings suspension
- If you have more than one employer, you can choose which of them to give notice of the reduction to (see KiwiSaver with multiple employers)
- You can revoke a reduction early by talking to your employer; to use one again with the same employer you need to reapply
- Your employer must keep contributing, and can choose to lower its contribution to 3% to match (Inland Revenue, Employer contributions)
How to apply: in myIR, go to your KiwiSaver account panel, select “KiwiSaver temporary rate reduction” and follow the prompts. You can also call Inland Revenue or send a web message in myIR. You receive an acceptance letter showing the start and end dates; show it to your employer so they reduce your rate, and keep it in case you change jobs.
When it ends: Inland Revenue sends you a notice within 30 days of the end date and lets your employer know. If you don’t apply for another reduction, your employer goes back to deducting at 3.5%.
Comparing the Options on a $70,000 Salary
Contributing less through pay can mean a lower rate, a temporary rate reduction or a full suspension. Lowering your rate to anything from 3.5% upward is an ordinary rate change through your employer, myIR or your provider (see how to change your KiwiSaver contribution rate); going below it needs the temporary rate reduction.
| Your rate | Your contributions a year (from gross pay) | Employer contributions a year (before ESCT) | Full government contribution? |
|---|---|---|---|
| 8% | $5,600 | at least $2,450 | Yes |
| 6% | $4,200 | at least $2,450 | Yes |
| 4% | $2,800 | at least $2,450 | Yes |
| 3.5% (default) | $2,450 | at least $2,450 | Yes |
| 3% (temporary rate reduction) | $2,100 | $2,450, or $2,100 if your employer matches the reduction | Yes |
| 0% (savings suspension) | $0 | $0, unless your employment agreement says otherwise | No, unless you make voluntary contributions |
Your contributions are taken from pay after tax but worked out on gross pay, so the take-home difference between two rates equals the difference in this column.
On this salary, moving from 8% to the 3.5% default lowers your contributions by $3,150 a year, and the temporary rate reduction by a further $350. At every rate in the table except a suspension, your employer keeps contributing and your own contributions stay above the $1,042.86 needed for the full government contribution.
When a Suspension Isn’t Needed
KiwiSaver deductions come only from salary or wages, so if you have none, nothing is deducted and there is nothing to suspend. That covers, for example, government-funded parental leave (see KiwiSaver contributions on parental leave), leaving employment to work for yourself (see KiwiSaver for the self-employed), and time between jobs.
Frequently Asked Questions
Can I suspend KiwiSaver in my first year of membership? Only with an early savings suspension: you need to have made a contribution and show evidence of financial hardship for reasons outside your control.
Will my employer know I’m on a savings suspension? Yes. You show your employer the notice Inland Revenue sends you, and Inland Revenue also sends your employer a notice if you gave it your employer’s details.
Can I make voluntary contributions during a savings suspension? Yes. A suspension stops the deduction from your pay, but you can still contribute directly to your provider, and those contributions count toward the government contribution.
Do contributions restart automatically when a suspension ends? Yes. If you don’t apply for another suspension, Inland Revenue asks your employer to start deductions again.
Can I have a temporary rate reduction and a savings suspension at the same time? No. You can’t apply for a temporary rate reduction if you have a savings suspension.