The $1000 kickstart was removed in 2015 and child enrolment has fallen sharply since. Providers say the compounding clock starts too late for too many young New Zealanders.
The number of children under 17 with a KiwiSaver account has halved over the past decade, according to data from the scheme's providers. In June 2015, there were 368,079 children enrolled. By last June, that figure had fallen to 169,409 — a decline of roughly 54 percent in ten years.
The most direct cause was the removal of the $1,000 kickstart payment in 2015. Previously, every new KiwiSaver enrolment — including children — received a $1,000 contribution from the government to get the account started. That was discontinued, and with it went one of the main incentives for parents to set up accounts for their children early.
Why the early years matter so much
The case for starting a KiwiSaver account as early as possible rests on compounding, and the numbers are striking even at small contribution levels. Sharesies co-founder Brooke Roberts calculated an example: if $500 was contributed to a child's account at birth and left untouched until retirement at 65, it could grow to around $26,500 in an aggressive fund — even without any further contributions. That is roughly a 52-fold increase over 65 years.
The mechanism is straightforward: returns earned in early years are reinvested and themselves earn returns. Over four or five decades, that exponential effect is powerful. A child who starts at age one rather than age 18 has an extra 17 years of compounding working in their favour, even if no further contributions are ever made.
What providers are doing
Some providers are trying to reverse the trend. Sharesies has announced it will contribute 25 cents per dollar into children's KiwiSaver accounts on its platform, up to a maximum of $100 per year, for the 2026-27 contribution year. The offer applies to contributions made for children under 16 between July 2026 and June 2027, with the payment made in August 2027.
Kernel founder Dean Anderson has called for more fundamental reform. He argues that the roughly $500 million the government spends annually on KiwiSaver contributions is "largely a tax credit flowing to the middle class" rather than targeting the young people who would benefit most from early engagement. His proposal: redirect that spending to seed accounts for children from birth, with optional parent matching for families who can afford to contribute.
Anderson also points to the youth unemployment rate — currently 14.4 percent nationally, and 23.5 percent for young Māori — as a cohort for whom early financial engagement would be most valuable, but who are currently least likely to have a KiwiSaver account.
The policy question
KiwiSaver participation is not mandatory, and parents are not required to set up accounts for their children. The scheme is designed around auto-enrolment for employees from age 18, meaning everyone entering the workforce gets an account. So the question of whether children should have accounts — and whether the government should co-invest in them — is a policy design question, not a gap in the system's coverage.
The decade-long decline in child enrolment is a signal that the financial incentive to set up accounts early, combined with the friction of doing so, has been sufficient to deter a meaningful number of parents. Whether that matters depends partly on how you weigh early compounding against the auto-enrolment pathway that begins at 18 anyway.
For a child born now, the auto-enrolment at 18 gives them roughly 47 years of compounding — still substantial, but not the 65 available if the account started at birth.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.