Going Self-Employed in NZ: What Changes for Your KiwiSaver and Cover

Leaving a salaried job means you lose the employer KiwiSaver match, sick leave and group cover, and ACC starts working differently. Here is what changes when you go self-employed, and how to replace each piece, with a 90-day checklist.

Going self-employed is usually framed as a tax and bookkeeping change. It is also a quiet change to your financial safety net. A salaried job came with several things attached that you never had to arrange yourself: an employer topping up your KiwiSaver, paid sick leave, often some group life or health cover, and an ACC arrangement that ran off your payslip in the background. The day you start working for yourself, most of that stops or starts behaving differently, and nobody sends you a reminder.

This guide walks through what actually changes when you leave PAYE for self-employment, and how each piece can be replaced. It covers your KiwiSaver and the government contribution, ACC, sick leave and group cover, and how to keep any existing insurance intact through the switch. None of it is hard once you can see the whole picture in one place.

TL;DR: Going self-employed ends the compulsory 3% employer KiwiSaver match,⁵ and no contributions come out automatically any more. You can still get the government contribution by paying in at least $1,042.86 between 1 July and 30 June, which earns up to $260.72.¹² You also lose sick leave and any group cover, ACC switches to a self-employed basis, and ACC still covers injury only, not illness.¹⁰

What changes financially when you go self-employed?

As an employee, a lot happened to your money before it ever reached you. KiwiSaver came off your pay and your employer added to it. PAYE, the ACC earners' levy and tax were deducted automatically. If you were sick, you had paid sick leave to fall back on. Many employers also provided some life, trauma or health cover as a staff benefit, and ACC cover ran off your wages without you doing anything.

Self-employment unwinds most of that. The headline ones are:

• No employer KiwiSaver match. The compulsory employer contribution stops, because you are now the employer and the employee, and nothing is automatic.⁵
• No paid sick leave. If you cannot work, income stops unless you have arranged your own cover.
• Group cover usually ends. Employer-provided life, trauma or health cover generally lapses when you leave, and it was rarely yours to keep.
• ACC changes shape. You move onto a self-employed ACC arrangement and pay your own levies, calculated differently from an employee's.⁷

The pattern is that the employer was quietly carrying part of your risk. Self-employment hands that part back to you. The good news is that each piece can be rebuilt deliberately, and several can be set up better than the version you had as an employee. The rest of this guide takes them one at a time.

What happens to your KiwiSaver without an employer match?

Your KiwiSaver account does not close or change provider when you leave a job. The money stays invested exactly where it was. What changes is the flow of contributions into it.

As an employee on the default settings, three things fed your account: your own 3% (or more), your employer's compulsory 3%, and, if you qualified, the government contribution.⁵ When you go self-employed, the employer 3% stops, and your own automatic deductions stop too, because there is no payroll taking them out. Unless you set something up, contributions simply cease.⁵

That has two effects worth being clear about. First, the employer match is gone, and there is no direct way for a sole trader to replace it pound for pound. Second, the responsibility for contributing at all now sits with you, by choice rather than by default.

Most self-employed people pick one of two approaches:

• Voluntary lump sums or regular payments directly to your KiwiSaver provider, set at whatever level suits your cash flow.
• At minimum, enough to capture the government contribution each KiwiSaver year, which is the one piece of "free" money still on the table once the employer match is gone.

Because nothing is automatic, the common mistake is simply forgetting, and quietly contributing nothing for a few years. Our companion guide on KiwiSaver when you are self-employed with no employer goes deeper on how to choose a contribution level and provider once payroll is no longer doing it for you.

How do you keep getting the government contribution?

This is the part most worth getting right, because it is the simplest win and it does not depend on having an employer at all.

Each KiwiSaver year runs from 1 July to 30 June. If you are eligible, the government adds 25 cents for every $1 you contribute, up to an annual maximum of $260.72.¹³ To collect the full amount, you need to put in at least $1,042.86 of your own money across that year.² Only your member contributions and voluntary contributions count towards this; employer contributions never did, which is why being self-employed does not, by itself, cost you the government contribution.²

A few details matter for self-employed people:

• The matching rate and maximum were cut at Budget 2025, effective 1 July 2025. The government now adds 25 cents per dollar, not 50, and the annual maximum fell from $521.43 to $260.72.¹³ If you remember a larger figure, that is why.
• People with annual taxable income over $180,000 are no longer eligible for the government contribution, an income cap introduced on 1 July 2025.⁴
• You can pay the $1,042.86 however you like across the year, as one lump sum before 30 June or spread out. As a self-employed person with uneven income, paying it in chunks when cash flow allows is often easier than one large June payment.

Figures correct as at 1 December 2025. Government contributions, contribution rates and eligibility are set by the Government and can change. Check current figures at ird.govt.nz.

What employer benefits do you lose, and how do you replace them?

Beyond KiwiSaver, a salaried job often bundled in benefits you may not have thought of as insurance at all. The table below sets out the common ones, what tends to happen when you leave, and the action that replaces each. It is a framework for what to check, not a recommendation about what you personally need.

Employee vs self-employed: what you lose and how to replace it

Source: IRD and ACC; Smiths Financial framework. General information only; figures correct as at 1 December 2025.

A couple of these deserve their own sections, because they are the ones people most often get wrong. ACC and income protection are next.

How does ACC change, and should you elect CoverPlus Extra?

As an employee, the ACC earners' levy came off your pay automatically, and weekly compensation after an injury was based on your salary. Self-employment changes both the billing and the calculation.

Once you are trading for yourself, you are placed on CoverPlus, the standard self-employed work-account cover, and you pay levies on your liable earnings each year.⁷ If an injury stops you working, CoverPlus pays weekly compensation at up to 80% of your taxable income, based on your most recently completed financial year.⁷ That backward-looking calculation is the catch. In your first year self-employed, your most recent return may show wages from a job you have left, or no self-employed income at all, so 80% of very little is very little.

CoverPlus Extra (CPX) is the optional alternative. Instead of looking back at a tax return, you agree a fixed level of cover up front, and ACC pays that agreed amount in full if an injury stops you working, regardless of your proven earnings.⁶ For the 2025/26 levy year you can agree cover between $39,492 and $122,232.⁶ That certainty is the main reason newly self-employed people consider CPX, though you do pay a levy on the agreed amount from the start, so it is a trade-off between certainty and cost rather than a free upgrade.

For reference, the ACC earners' levy for the 2025/26 levy year is $1.67 per $100 of liable earnings (1.67%), charged on income up to $152,790, for a maximum annual earners' levy of $2,551.59.⁸⁹ Whether default CoverPlus or CoverPlus Extra fits better depends on your debts, dependants and how settled your income is, which is a conversation worth having before you start trading rather than after.

Why does income protection matter more once sick leave is gone?

This is the gap that catches the most people, so it is worth stating plainly. ACC covers injury only. It pays nothing if illness stops you working, whether that is cancer, a heart condition, or many back and mental-health conditions that are not the result of an accident.¹⁰ Both CoverPlus and CoverPlus Extra share this limit. Sorting out your ACC cover does not close it.

As an employee, paid sick leave was your first line of defence when illness, not injury, kept you off work. Self-employment removes it. For many people, illness is at least as likely as injury to cause an extended period off work, and neither ACC nor any employer is standing behind you now.

The cover designed for this is private income protection insurance, which can be structured to pay a monthly benefit when sickness, not just an accident, stops you working. As an independent adviser, Smiths can compare income protection across the major New Zealand insurers and line the wait period and benefit period up with your ACC arrangement, so you are not paying twice for the same accident cover. Our guide on being off work through illness rather than injury works through how that gap actually plays out. Income protection is not the only cover a self-employed person may consider, but with sick leave gone it is often the first one to look at.

How do you keep existing insurance going through the change?

If you already hold personal life, trauma, income protection or health cover, the good news is that going self-employed does not cancel it. Personal policies belong to you, not your employer, so they continue as long as the premiums are paid.

The thing to watch is anything that ran through your old job:

• Group cover lapses. Life, trauma or health cover provided as a staff benefit generally ends when you leave, and it was rarely portable. If you were relying on it, you are now uncovered for that piece.
• Premiums that came off your pay stop coming off. Any cover paid by salary deduction needs a new payment method set up, or it can lapse without you noticing.
• Your circumstances have changed, which matters for what cover is appropriate. New business debt, irregular income and the loss of sick leave all change the picture, even if your policies have not.

One important point about timing: it is generally easier to put new cover in place before you leave, while you still have a steady income and your health history is what it is. Insurance is underwritten on your health, and applying is simpler when nothing about your situation is mid-change. If you are weighing up cover, doing it before the leap, rather than after, tends to be the smoother path. Whether a claim is paid always depends on the policy terms, exclusions, stand-down periods and your disclosure, so the detail matters and it is worth getting the structure right rather than rushing.

A transition checklist for your first 90 days self-employed

You do not have to do everything at once. A sensible order for the first three months:

1. Confirm your KiwiSaver is intact and note that contributions have stopped. Decide how you will contribute now that payroll no longer does it.⁵

2. Set up to capture the government contribution. Work out how you will pay at least $1,042.86 to your provider before 30 June, in one go or in instalments.¹²

3. Register with ACC as self-employed and check which cover you are on. If you have not chosen, you are on default CoverPlus.⁷

4. Decide on CoverPlus vs CoverPlus Extra, especially if your first-year income history is thin, which is when the gap is widest.⁶⁷

5. Replace your lost sick leave by reviewing income protection that covers illness as well as injury.¹⁰

6. Check any existing personal cover still has a working payment method, and confirm what employer group cover you are losing.

7. Note what is gone for good — the employer match has no direct replacement, so factor that into how much you contribute yourself.⁵

8. Book a review to line ACC, income protection and KiwiSaver up together, ideally before you make the leap. Our broader self-employed financial checklist covers the wider list.

Frequently asked questions

Does my KiwiSaver stop when I go self-employed? Your account does not close, and the money stays invested. What stops is the flow of contributions: there is no employer match any more, and your own automatic deductions end because there is no payroll.⁵ From then on, contributing is something you arrange yourself, either as lump sums or regular voluntary payments.

Can I still get the government contribution if I am self-employed? Yes. The government contribution has never depended on having an employer. If you are eligible and pay at least $1,042.86 of your own money into KiwiSaver between 1 July and 30 June, you receive up to $260.72.¹² People with annual taxable income over $180,000 are no longer eligible following the 1 July 2025 change.⁴

How much is the KiwiSaver government contribution now? After Budget 2025, the government adds 25 cents for every $1 you contribute, up to a maximum of $260.72 a year, with the rate and maximum effective from 1 July 2025.¹³ This is lower than the previous $521.43 maximum, which is why older figures you may have seen no longer apply.

Do I have to keep paying ACC if I am self-employed? Yes. ACC cover is not optional for the self-employed. You are placed on CoverPlus and pay levies on your liable earnings, with weekly compensation of up to 80% of your most recently filed taxable income if an injury stops you working.⁷ You can instead elect CoverPlus Extra to agree a fixed cover amount up front.⁶

Does ACC cover me if I get sick rather than injured? No. ACC covers injury only and pays nothing if illness stops you working.¹⁰ As an employee, sick leave filled part of that gap. Self-employed, the usual replacement is private income protection insurance, which can be set up to cover illness as well as injury.

Should I sort out my cover before or after I go self-employed? There is no single rule, but cover is generally easier to arrange while you still have a steady income and your circumstances are settled, which often means before you leave. Insurance is underwritten on your health, so applying while things are stable tends to be simpler. Personalised advice can work through what fits your situation and timing.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority to provide financial advice, and is a member of the Financial Dispute Resolution Service (FDRS). KiwiSaver is a long-term savings scheme; government contributions, contribution rates, withdrawal rules and tax settings are set by the Government and can change. Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure. ACC and KiwiSaver figures, thresholds and rates are set by Government and can change; figures are correct as at 1 December 2025 — check current figures at ird.govt.nz, kiwisaver.govt.nz and acc.co.nz. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 1 December 2025.