KiwiSaver

KiwiSaver is a retirement savings program where employers contribute to their employees’ accounts and ensure that employee contributions are deducted from their salary.

As an employer, you bear several responsibilities that must be fulfilled accurately. These obligations not only affect the future of your employees but also entail the risk of penalties if left unfulfilled. Your duties include:

Contact your KiwiSaver provider to contribute to your own KiwiSaver scheme. They will provide you with information about contribution requirements and guide you on how to make contributions.

To ensure that you complete all the essential tasks, follow these steps.

Employees between the ages of 18 to 64 are automatically enrolled in this retirement savings program, but they can choose to opt out if they wish to do so.

However, employees under 18 or 65 years and above can join in two ways:

1. By providing you with a KiwiSaver deduction form (KS2).
2. By getting in touch with a KiwiSaver scheme provider.

If your new employee meets the following criteria, you will need to enrol them:

• They are between the ages of 18 and 64.
• They reside in New Zealand or have the right to reside in New Zealand indefinitely.
• You are not an exempt employer.

Certain employees, such as contractors, secondees, and casual staff, are not subject to automatic enrollment. A list of exempt employees can be found on the Inland Revenue website.

If you have a KiwiSaver scheme that you have selected for your employees, you must:

• Notify new employees in writing that they will be assigned to this scheme if they do not select their own.
• Provide them with the investment statement of your chosen scheme.

Start deducting contributions from their first payday.

Your new employee is required to provide you with one of the following:

• KiwiSaver deduction form (KS2). If they do not complete the form, deductions will be made at the default rate of 3%.
• A letter from Inland Revenue confirming that they are currently on a contributions holiday.

KiwiSaver forms and guides — Inland Revenue

Ensure that your employee receives an information pack (KS3) within seven days.

The Inland Revenue website contains comprehensive information and links to download opt-out and deduction forms:

Starting employees in KiwiSaver — Inland Revenue

After enrollment, employees are given a period of eight weeks to consider whether they wish to continue their participation in KiwiSaver.

How to make an opt-out request — Inland Revenue

As part of the payday filing process, it is required to send both employer and employee contributions to Inland Revenue on a monthly basis. These contributions are then passed on to the employee’s KiwiSaver provider.

Making deductions — Inland Revenue

Payroll deductions

Using Inland Revenue’s ir-File online service is the simplest way to file your EMS. It can save you significant time and effort during each pay cycle.

Employees are provided with the option to choose the desired amount to be deducted, with five contribution rate choices based on their before-tax pay: 3%, 4%, 6%, 8%, or 10%.

In the event that they do not specify their preferred rate, a deduction of 3% should be made.

As per legal requirements, you must contribute 3% of your employee’s gross salary or wage towards their KiwiSaver. It is permissible to make additional contributions if you desire.

It is important to note that the 3% contribution should be in addition to their total salary or wages, which encompasses:

• bonuses
• commissions
• extra salary gratuity
• overtime
• and any other before-tax payments such as ACC or paid parental leave.

To simplify the process, Inland Revenue’s PAYE calculator includes KiwiSaver calculations. You may also use the PAYE deduction tables to compute the KiwiSaver contribution.

Deductions from salary and wages – Inland Revenue

Employer superannuation contributions are subject to the Employer Superannuation Contribution Tax (ESCT).

Tips and advice on ESCT— Inland Revenue

Deduct ESCT from employer contributions — Inland Revenue

It is mandatory to continue making deductions for employees in KiwiSaver, unless one of the following occurs:

• The employee is on a savings suspension, confirmed by either Inland Revenue or through a savings suspension confirmation letter from the employee.
• Inland Revenue instructs you to cease making deductions for a particular employee.
• The employee reaches the age of 65 and opts to terminate their deductions from their pay. In this case, they must provide a non-deduction notice (KS51).
• Inland Revenue may also request that you commence making deductions for an employee if they directly join a scheme or when their savings suspension period expires.

Employees have the flexibility to switch between the five contribution rates (3%, 4%, 6%, 8%, or 10%) by informing you of their desired rate. However, they are not permitted to alter the rate more frequently than every three months, unless you both agree to do so.

Like all business records, KiwiSaver documents must be kept for seven years.

Personnel files and record-keeping

If your employees are members of this retirement savings scheme, it is your responsibility to maintain records of the following:

• each employee’s contribution rate
• PAYE records showing deduction amounts
• any savings suspensions or opt-out requests
• amount of ESCT deducted from your employer contributions.

Tips and advice on ESCT — Inland Revenue

If you need help, contact us.