A survey by tax platform Hnry shows 15 percent of sole traders would consider alternative work arrangements under National's compulsory KiwiSaver contributions for the self-employed starting in 2028.
National's policy requires self-employed individuals to contribute 4 percent of income to KiwiSaver from 1 July 2028, rising to 6 percent by 2032. The move aims to align combined rates with Australia's 12 percent superannuation target.
Hnry co-founder James Fuller warned the changes risk turning KiwiSaver into another tax for sole traders with variable incomes. Enforcement details remain unclear, with National revenue spokesperson Simon Watts noting mechanics via provisional tax or GST still need development.
New Zealand has around 416,000 sole traders, representing 15.1 percent of the workforce and generating $78 billion or 17 percent of GDP in 2025/26. Only 44 percent currently contribute to KiwiSaver, compared with 78 percent of employees.
Budget 2025 and the co-contribution cut
The 2025 Budget halved the government co-contribution from 50 cents to 25 cents per dollar, capped at $260.72 annually with an $180,000 income threshold. This change is expected to reduce savings for about 125,000 self-employed members.
National's full KiwiSaver package, including compulsion and other measures, carries an estimated cost exceeding $1 billion over four years. Default employee and employer rates are already scheduled to reach 3.5 percent from April 2026 and 4 percent from April 2028.
National's policy risks turning KiwiSaver into another tax for sole traders with variable incomes.
Labour's alternative and sector reaction
Labour has pledged compulsory 6 percent employer contributions by 2028 with greater flexibility for the self-employed. BusinessNZ surveys show strong support for compulsion among larger firms, though self-employed respondents were underrepresented.
The Retirement Commission has highlighted risks to retirement adequacy for self-employed workers, women, Māori and Pacific peoples. National frames the policy as ensuring fairness and building private savings amid rising NZ Super costs projected at $29 billion by 2028/29.
Fiscal sustainability angle
Treasury modelling shows the package shifts burden to individual savers without direct fiscal outlays for employer matches. Cash-flow pressures on variable-income sole traders in construction and professional services could prompt business adjustments or exits.
Enforcement through existing IRD systems may add compliance costs for irregular earners. The policy reflects a focus on personal responsibility but collides with the realities of New Zealand's large and fast-growing sole trader sector.
