Paying KiwiSaver While on Parental Leave in NZ: Keeping Contributions and the Government Top-Up Going

KiwiSaver does not come out of Paid Parental Leave automatically, and there is no employer match while you are on leave. Here is what happens to your contributions and the $260.72 government top-up, and how to protect them.

Parental leave changes your income for a while, and it quietly changes your KiwiSaver too. The employer match stops, your own contributions often drop to nothing, and the annual government top-up can slip out of reach without you noticing. None of this is a disaster, but it is easy to miss, and a small, deliberate top-up can keep the account on track.

This guide explains whether KiwiSaver comes out of Paid Parental Leave, what happens to the employer match and the government contribution while you are on leave, and the simple steps to protect them.

Is KiwiSaver deducted from Paid Parental Leave payments?

TL;DR: Paid Parental Leave is paid by Inland Revenue, and KiwiSaver is not deducted automatically — you can choose to have it taken out, but there is no employer match on it. ⁵⁹ To still receive the full government contribution of $260.72, you need to contribute $1,042.86 of your own money in the KiwiSaver year. ¹²

Paid Parental Leave (PPL) is administered and paid by Inland Revenue (IRD), not by your employer. ⁹ For the 1 July 2025 to 30 June 2026 year the maximum payment is $788.66 gross per week, paid for up to 26 weeks, with a minimum rate of $235.00 gross per week for eligible self-employed parents. ⁵

KiwiSaver contributions are not automatically deducted from PPL. You can choose to have them taken out of your PPL payments, but it does not happen by default, and there is no employer matching contribution on PPL. ⁵⁹ So if you do nothing, your KiwiSaver deductions simply stop for the period you are on PPL.

That is not necessarily wrong — many people are happy to pause while their income is lower. The point is that it is a choice, and it has knock-on effects on the match and the government contribution that are worth understanding before you decide.

Does your employer keep matching while you're on leave?

Generally, no. Compulsory employer contributions are based on the actual salary or wages your employer pays you through PAYE. ⁷ When you are not being paid through your employer's payroll — which is the case while you are on IRD-paid PPL, and during any unpaid leave — there is no PAYE salary for the employer contribution to be calculated on, so the match reduces or stops. ⁷

As at 1 August 2025 the compulsory minimum employer contribution is 3% of your gross taxable pay. ⁶ That is the amount that pauses while you are off payroll. A few situations to keep straight:

If your employer pays you any amount through normal payroll while you are on leave — some workplaces top up parental leave pay — the compulsory employer contribution still applies to that portion. ⁷ But on the IRD-paid PPL itself, there is no match.

What happens to the government contribution during a leave year?

This is the part most worth your attention. Each KiwiSaver year (1 July to 30 June) the Government adds 25 cents for every $1 you contribute, up to a maximum of $260.72. ¹³ To collect the full amount you need to have contributed at least $1,042.86 of your own money during the year. ²

The catch for parents on leave is what counts toward that $1,042.86. Only your own contributions count — employer contributions, past government contributions and money transferred from Australian retirement schemes are all excluded. ² So during a year where your salary deductions stop and the employer match pauses, your own contributions can fall well short of $1,042.86 without you realising the top-up is still there to be claimed.

You do not lose everything if you fall short. The Government still pays 25 cents per dollar on whatever you did contribute — so if your contributions for the year added up to $400, you would receive a $100 top-up rather than the full $260.72. ³ But the gap between a partial and a full top-up is real money, and for many people on leave it comes down to a single voluntary contribution before 30 June.

A couple of eligibility points worth knowing: the government contribution is for members aged 16 to 65 who mainly live in New Zealand, and from 1 July 2025 it is not paid to members with annual taxable income over $180,000. ⁴ For most people on parental leave, income for the year is lower, not higher, so the $180,000 cap rarely bites — but it is worth a thought for higher-earning households.

For the timing rules, see our guide on the government contribution top-up deadline.

How to keep contributing while on parental leave

If you want to keep your balance and your government-contribution entitlement on track, you have a few simple options. ⁸

1. Have KiwiSaver deducted from your PPL. You can choose to have contributions taken out of your IRD-paid Paid Parental Leave. ⁵ This keeps a steady trickle going in, though remember there is no employer match on it. ⁹

2. Make voluntary contributions to IRD. You can pay voluntary contributions at any time through your myIR account, and IRD passes them to your scheme. ⁸ This is the most flexible option — pay a lump sum or smaller amounts as your budget allows.

3. Pay directly to your provider. Most schemes — for example Booster, Milford, Generate, Simplicity, Fisher Funds or Kernel — accept voluntary contributions straight into your account. ⁸ Check your provider's process, as some require the payment to clear before 30 June to count for that year.

To count toward the $1,042.86 for a given KiwiSaver year, a voluntary top-up must be made by 30 June. ⁸ If you are leaving it late, allow time for the payment to process so it lands in the right year.

Voluntary top-ups: how much to protect the $260.72

The arithmetic is straightforward. To receive the full $260.72 government contribution, your own contributions across the year (1 July to 30 June) need to reach $1,042.86. ² So the size of the top-up you need is simply $1,042.86 minus whatever you have already contributed from salary, PPL or earlier voluntary payments.

Illustration based on IRD rules for the 1 July 2025 to 30 June 2026 KiwiSaver year. ¹² Figures are correct as at 1 August 2025.

If a full top-up is not affordable in a tight leave year, a partial one still earns 25 cents on each dollar. ³ Contribute $500 and you collect $125; contribute $50 and you collect $12.50. There is no minimum — every dollar you put in is matched up to the cap.

Whether topping up is the right call depends on your wider budget during leave, your other priorities, and your household's cash flow. This is general information, not a recommendation to contribute a particular amount.

What about unpaid leave or returning part-time?

Many parents take unpaid leave once the 26 weeks of PPL run out, or return to work part-time. Both affect KiwiSaver.

Unpaid leave. When you are not being paid through PAYE at all, there are no salary deductions and no employer match. ⁷ If you would rather not have your balance sit idle, voluntary contributions are the way to keep it ticking over. ⁸ Some people instead formally pause with a savings suspension — useful if you want IRD to stop expecting deductions — though a suspension does not put money in; it just stops the deductions. We cover this in our guide on a savings suspension or contribution break.

Returning part-time. Once you are back on payroll, your contributions and the employer match resume, but they are calculated on your actual (now lower) pay. ⁶⁷ At the minimum 3% employee rate, you need income above roughly $34,762 across the year for salary deductions alone to reach $1,042.86 ($1,042.86 ÷ 3%). ²⁶ On reduced part-time hours you may fall short, so a small voluntary top-up before 30 June can be the difference between a partial and a full government contribution.

The long-term cost of a contribution gap for parents

A single year of paused contributions does not sound like much. But because KiwiSaver compounds over decades, a gap early on — and the missed government contribution that goes with it — has a longer tail than the dollar figure suggests.

The chart below illustrates the idea: a 32-year-old who takes 12 months' leave and contributes nothing for that year, versus the same person making a $1,042.86 top-up to secure the government contribution. The difference is modest in the first year and grows over time as returns compound on the larger balance.

A one-year parental-leave gap vs topping up: balance impact by 65

Two-line projection chart. Line A: a 32-year-old taking 12 months' leave with no contributions that year. Line B: the same person making a $1,042.86 voluntary top-up to keep the government contribution. Modelled from IRD rules and typical KiwiSaver returns, 2026.

Projections are illustrations based on stated assumptions, are not predictions, and actual results will differ. Returns are not guaranteed and the value of investments can go down as well as up; past performance is not a reliable indicator of future performance.

The takeaway is not that a leave gap is harmful — it is that a small, well-timed top-up can keep a temporary dip from compounding into a permanent shortfall. For many households the government contribution alone makes a modest top-up worthwhile.

Building a plan around parental leave with an adviser

Parental leave is one of those points where several financial decisions land at once: a lower income for a while, a new dependant, and a KiwiSaver account that needs a small nudge to stay on track. It is also a good moment to look at whether your life and income protection cover still fits a growing family — our guide on life cover for parents walks through what people in that situation often weigh up.

A personalised conversation can pull these threads together: how much to top up, whether to pause or keep contributing, your fund choice for your timeframe, and the cover that sits around it. Smiths Financial has no in-house KiwiSaver product, so any guidance comes from comparing across the major NZ providers. If you are wondering whether it is the right time, our guide on when to see a financial adviser may help.

Frequently asked questions

Does KiwiSaver come out of Paid Parental Leave automatically?

No. Paid Parental Leave is paid by Inland Revenue, and KiwiSaver is not deducted automatically. You can choose to have it deducted from your PPL payments, but there is no employer matching contribution on PPL. ⁵⁹

Will my employer keep contributing while I'm on parental leave?

Generally not while you are on IRD-paid PPL or unpaid leave, because compulsory employer contributions are based on the actual pay your employer puts through payroll. If your employer pays you a top-up through normal payroll, the match applies to that portion. ⁶⁷

How do I still get the full government contribution during a leave year?

Make sure your own contributions for the KiwiSaver year (1 July to 30 June) reach $1,042.86, topping up voluntarily through myIR or your provider if salary deductions fall short. That secures the full $260.72. ²⁸

What if I can only afford a partial top-up?

You still benefit. The Government pays 25 cents for every $1 you contribute, up to the cap, so any amount you put in is matched — for example, a $500 contribution earns a $125 government contribution. ³

Does the top-up have a deadline?

Yes. To count toward a given KiwiSaver year, a voluntary contribution must be made by 30 June. If you are leaving it close to the date, allow time for the payment to process. ⁸

Can I just pause my KiwiSaver while I'm off?

You can stop contributing, and many people do during leave. Just be aware that pausing means no employer match and, if your own contributions fall short of $1,042.86, a smaller government contribution for that year. A savings suspension formally stops deductions but does not add money in. ²⁷

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 on personal risk insurance, health insurance, general insurance, KiwiSaver and managed funds, 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 (PIR) settings are set by the Government and can change — figures are correct as at 1 August 2025, so check current rules at ird.govt.nz, kiwisaver.govt.nz and sorted.org.nz, and the relevant scheme's Product Disclosure Statement. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 1 August 2025.