Parental leave in New Zealand can last up to 26 weeks (primary carer) or more with extended leave. During that time, your KiwiSaver contributions change — and understanding the rules helps you avoid gaps that cost you later.
Do You Keep Contributing During Parental Leave?
It depends on whether you are receiving salary or wages from your employer.
Paid parental leave from the government (Parental Leave Payments)
Most parents receive government Parental Leave Payments (administered by MSD, paid through IRD) rather than their regular salary. These payments are not treated as “salary or wages” under the KiwiSaver Act — so:
- Employee KiwiSaver contributions are not deducted from government parental leave payments
- Employer KiwiSaver contributions are not required during this period
Your KiwiSaver balance stays invested but no new contributions are flowing in.
Employer-paid top-up during parental leave
Some employers continue paying salary top-ups or supplementary payments during parental leave. If these payments are salary/wages, KiwiSaver contributions do apply — both your employee deductions and employer contributions continue on those amounts.
Check your employment agreement or HR policy to understand what your employer pays during leave.
Employer Contributions During Parental Leave — The Detail
Under the Parental Leave and Employment Protection Act 1987 and the KiwiSaver Act 2006, employers are not required to make KiwiSaver contributions during periods when no salary or wages are paid.
This means for most parental leave periods:
- No employer 3% contribution
- No employee contribution (nothing being deducted from pay)
- Existing balance continues to be invested
For a parent on $80,000, taking 6 months of fully unpaid leave (i.e., receiving government payments only):
- Lost employer contributions: ~$1,200 (6 months × $2,400/year employer contribution)
- Lost employee contributions at 3%: ~$1,200
The Member Tax Credit During Parental Leave
The MTC (up to $521.43/year) is based on your own contributions, not employer contributions. If you make no contributions during parental leave, you won’t earn MTC for that period.
However, you can top up voluntarily before 30 June to hit the $1,042.86 threshold and earn the full MTC — even during parental leave.
Example: Mia takes 6 months of parental leave. Her payroll contributions for the year total $520 (6 months at 3% of $40,000 pro-rated). Before 30 June, she makes a voluntary top-up of $522.86. Total: $1,042.86. She receives the full $521.43 MTC.
See the lump sum contributions guide for how to make a voluntary top-up.
Should You Apply for a Savings Suspension During Parental Leave?
A savings suspension (contribution holiday) formally pauses your KiwiSaver contributions. During parental leave, this is often not necessary — because if you’re receiving government parental leave payments (not salary), contributions aren’t being deducted anyway.
A savings suspension is more relevant if:
- You return to work part-time after parental leave and want to pause contributions during the transition
- You want to formally ensure no contributions are deducted from any employer top-up payments
If you do apply for a savings suspension, remember: the minimum is 3 months, maximum 1 year per application, and you must have been a KiwiSaver member for at least 12 months.
What Happens to Your KiwiSaver Balance During Leave?
Your balance remains invested in your chosen fund throughout parental leave. It continues to grow (or fluctuate) according to the fund’s performance — the leave has no direct impact on the investment.
If markets perform well during your parental leave, your balance will grow even without new contributions. If markets fall, your balance may dip — but this is the normal operation of an invested fund.
Returning to Work After Parental Leave
When you return to work, KiwiSaver contributions automatically restart — your employer begins deducting from your pay and making employer contributions again. No action is required from you.
If you had a savings suspension active, you’ll need to contact IRD to end it when you return.
Tips to Minimise the Parental Leave KiwiSaver Gap
1. Make a voluntary top-up before 30 June Even a small lump sum top-up before the end of the KiwiSaver year ensures you earn some MTC. Contributing $1,042.86 earns the full $521.43.
2. Don’t apply for a savings suspension unless you need to If contributions aren’t being deducted during government leave anyway, a formal suspension adds little benefit and may complicate your restart when you return to work.
3. Consider a lump sum when you return A bonus, tax refund, or savings you’ve built up can be contributed as a lump sum in your first year back — helping to fill the gap from the leave period.
4. Check your employer’s policy Some employers continue full salary and therefore full KiwiSaver contributions during parental leave. Others top up the government payment. Understanding what your employer pays determines how large the KiwiSaver gap actually is.
KiwiSaver After 26 Weeks — Extended Leave
If you take extended parental leave beyond the government-paid period (up to 52 weeks total is available under NZ law, but only 26 weeks is paid by the government), you may be on unpaid leave for the additional period. The same rules apply — no salary means no mandatory contributions. A savings suspension may be useful here if your employer is still paying some form of salary and you want to pause deductions.