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KiwiSaver - Employee

KiwiSaver was primarily designed as a voluntary employee savings scheme. It is locked-in until retirement age. The benefits of joining KiwiSaver after 1 April 2009 are:

All KiwiSaver members will be entitled to a $1,000 kickstart from the government.
All over 18 years of age member contributions to KiwiSaver (and complying superannuation funds) will be matched by a tax credit of up to $20 per week ($1,040 per year) that will be paid directly into your KiwiSaver account (or complying superannuation fund).
All employees contributing to KiwiSaver (and complying superannuation funds) will also be entitled to a matching employer contribution as follows: (updated to reflect changes due from 1 April 2009)

From	Minimum employee contribution (% of gross salary)	Employer contribution (% of gross salary)	Total employee and employer contributions (% of gross salary)
1 April 2008	4	1	5
1 April 2009	2	2	4
1 April 2010	2	2	4
1 April 2011+	2	2	4

After three years of saving, some savers that are first home buyers will be eligible for a housing deposit subsidy of $1,000 per year of saving, up to $5,000 in total. Eligibility for the subsidy is determined by the individuals income and house price caps. For more information see 1st home and mortgage support.

KiwiSaver Changes 1 April 2009
From 1 April 2009 some changes are being made to KiwiSaver.
·        The minimum employee contribution will reduce to 2% of your gross pay.
·        The compulsory employer contribution (CEC) will increase to 2% and won't increase further in future years.
·        The employer superannuation contribution tax (ESCT) exemption will be capped at the Compulsory Employer Contribution of 2%.
·        The employer tax credit (ETC) will be removed - this change affects employers, not KiwiSaver members.
·        The fee subsidy will be removed.
·        The KiwiSaver Act will be amended and the Employer Relations Act amendment relating to KiwiSaver will be repealed so that your gross pay can't be reduced if you join KiwiSaver.
·        If you're already a member of KiwiSaver you'll be able to reduce the amount you contribute from your pay to 2% from 1 April 2009.
If you want to reduce your contribution, you'll need to let your employer know in writing. Either complete a new KiwiSaver deduction form (KS2) or write to your employer.
If you're a new member and you don't tell your employer how much you want deducted from your pay, IRD will assume you want to contribute 2%.
Your employer will increase their contribution to 2% (and are not required to increase it any further) from 1 April.
If your employer contributes more than 2% to your KiwiSaver account, from 1 April 2009 they'll have to pay tax on the portion of the contributions above 2%. This means there'll be less money going in to your KiwiSaver account.
If your employer contributes 2% there'll be no change to your employer contributions.
Reducing your contribution to 2% may affect the amount of Member Tax Credit you receive.
Depending on your income, if you do reduce your contribution to 2% it may affect how much member tax credit (MTC) you receive.
If you're eligible, the Government will pay into your KiwiSaver scheme an annual member tax credit matching your contributions up to $1,042.86 per year (this works out to about $20 per week). If you reduce your contribution to 2% of your gross pay, you might not contribute enough to your KiwiSaver scheme to receive the maximum member tax credit. You can make voluntary contributions to your KiwiSaver account so that your contributions total $1,042.86 each year.
If your income is less than $52,000 and you reduce your contributions to 2% of your gross pay, you'll need to make voluntary contributions if you want to receive the maximum member tax credit.
If your income is more than $52,000 you can reduce your contributions to 2% of your gross pay and you'll still receive the maximum member tax credit.

Transitional Provisions

Your employer may contribute less than the above rates to KiwiSaver if your employer is contributing to another registered superannuation scheme on your behalf.

Definition of salary and wages

Your salary/wages used to calculate your KiwiSaver contributions does not include:

redundancy payments and
expenditure and allowances for accommodation overseas or other costs of overseas living.

But is deducted from PAYE-related remuneration such as bonuses, overtime and commission.

Weekly ACC compensation and parental leave payments are excluded from the calculation of salary or wages for compulsory employer contributions.

How to Join

If you wish to join KiwiSaver, we suggest you calculate whether you can afford it, determine your Risk Profile which will assist in selecting your funds, and complete the Enrolment form, print (or submit), sign and mail. Submitted applications will be emailed to you, for signature.

Advise your employer, who will commence deductions from your pay at your selected rate (2%, 4% or 8%), and IRD will forward your savings to your provider. If you are a new employee, your employer will need to complete a KS1 KiwiSaver Employee details form We`also recommend you select your own KiwiSaver scheme.

Please ensure that your employers details are included and your identification verified or copies of documents required for verification included with the application.

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Q & A

If you have a question, contact us and we will endeavour to answer it. Email us here.

Frequently asked questions will be listed below.

What happens if an employee has two jobs?

All contributions a member makes into their KiwiSaver scheme are done through their employer. If an employee is working two separate jobs, this will make no difference to the employer as contributions are passed onto Inland Revenue, who will allocate the contributions accordingly.

Regardless of how many jobs a person has, they can elect or not elect to contribute. However, they will always only have one KiwiSaver scheme.

What happens if a new employee already belongs to a KiwiSaver scheme?

They will keep their existing scheme. The new employer will deduct the relevant contribution amount and pass it to Inland Revenue, who will then pay this amount to the employee's KiwiSaver scheme.

What if an employee is temporary?

Temporary staff on contracts of 28 days or less do not have to be enrolled in KiwiSaver.

If employees choose different providers, will that generate additional payroll requirements?

No. All contributions go from the employer to Inland Revenue, which is responsible for directing those funds to the respective providers.

When will KiwiSaver contributions start being deducted from an employee's pay?

For employees who are automatically enrolled in KiwiSaver, contributions will be deducted from the first pay after they start their new job. There is a three month period, where contributions will be held by the IRD, giving employees the required opportunity to opt-out.

What happens if an employee starts work or changes jobs and doesn't already belong to a KiwiSaver scheme?

If they start a new job on or after 1 July 2007, they will be automatically en olled in KiwiSaver, with the ability to opt out.

Apart from certain exceptions, automatic enrolment will apply to all new employees aged between 18 and 65 (the current age of eligibility for New Zealand Superannuation) who begin a job with a separate payroll. KiwiSaver deductions will start from their first pay day.

How do existing employees opt in?

If they are younger than age 65 and do not already belong to a KiwiSaver scheme, existing employees can opt in to the a KiwiSaver scheme by giving their employer a deduction notice. If their employer has a preferred KiwiSaver scheme, by giving their employer a KiwiSaver deduction notice, they will be opting into that scheme. Alternatively, they can opt in by signing up directly with the provider of a KiwiSaver scheme. This may be with or without a financial adviser's assistance.

Can employees opt out of KiwiSaver?

Employees will be able to opt out by notifying Inland Revenue between the 13th and 55th day after starting their new employment. If they opt out, Inland Revenue will notify their employer and refund any deductions made.

What happens if employees do not opt out but want to stop contributions within the first year?

If they do not opt out within the allocated eight-week period, they must continue to make contributions for 12 months before being able to apply to Inland Revenue for a contributions holiday.

In certain circumstances, e.g. extreme financial difficulty, they may apply to Inland Revenue for a contributions holiday before the 12 month period has ended.

How will employees be allocated to a KiwiSaver scheme if they don't select one?

If their employer has a preferred scheme, they will be allocated to that scheme.

If the employer does not have a preferred scheme, they will be allocated to a default provider as outlined in the question 'What is a default provider?' see above.

What is a contributions holiday and how does it work?

Subject to the following circumstances, members can stop and start contributing as they wish by applying for a contributions holiday.

They can apply to Inland Revenue to take a contribution holiday if either:

12 months have passed since their first contribution was received by Inland Revenue or a KiwiSaver scheme; or
They are suffering, or likely to suffer, significant financial hardship and at least one contribution has been received from them by Inland Revenue.

The contribution holiday will be three months (unless the Inland Revenue agrees to a longer period) in the case of financial hardship and otherwise will be between three months and five years.

At the end of the period, contributions will resume unless a further option to stop them is exercised. Members must reapply to Inland Revenue to renew the contributions holiday.

The minimum period for a contributions holiday will be three months unless the employer agrees to a shorter period. This minimum period is to reduce employer compliance costs associated with having to stop and start contribution deductions frequently.

Can payments other than the standard contributions be made into a KiwiSaver scheme?

Yes. Extra payments can be made via Inland Revenue or, where KiwiSaver providers allow it, directly to the scheme.

For FirstChoice KiwiSaver extra contributions can be paid directly to the scheme either by lump sum or direct debit

What happens when the member reaches the age of entitlement for New Zealand Superannuation?

On becoming eligible for New Zealand Superannuation (currently age 65), members will have the option of withdrawing their KiwiSaver funds as a single lump sum.

If they have invested in a scheme managed by most providers, they may also withdraw their funds by way of regular lump sums (subject to any rules determined by the provider). They can also leave their funds in KiwiSaver for as long as they wish after turning 65.

What information will employees get about their investment?

If employees select their own scheme, they will be required to read the Investment Statement and complete the application form enclosed.

If they have been allocated to a default scheme, they will still receive an Investment Statement, although this will not happen until contribution deductions have started. All KiwiSaver members will receive a statement at least annually, an annual tax statement and a full annual report, detailing the scheme's financial accounts.

How can KiwiSaver members access their benefits?

Generally speaking, KiwiSaver is a locked-in superannuation scheme. Funds will usually remain invested until a member reaches New Zealand superannuation qualification age, which is currently 65, or the date on which they have been a member of a KiwiSaver scheme for a minimum of five years, whichever is later. However, there are a number of circumstances in which funds may be released early.

These exceptions are detailed on our early withdrawal page.

Members may also apply to take a contributions holiday after 12 months using this request form.