Employees who are automatically enrolled can opt out but must do so within a specified time (from the end of week 2 of their employment to the end of week 8) by filing the prescribed form (KS10). All eligible existing employees can join the scheme at any time they wish by notifying their employer.
There are 3 employee contribution rates, being 3%, 4%, or 8%. The employee can elect the rate at which they want their contributions deducted. If an employee does not elect a rate, then the default rate of 3% will be used by the employer for contribution deductions made.
Compulsory Employer Contributions
From 1 April 2008, it became compulsory for employers to contribute to their eligible employees’ KiwiSaver scheme unless the employer is already paying into another registered superannuation scheme for the employee.
This minimum compulsory contribution rose to 3% from 1 April 2013. Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT) on a progressive scale based on the employees’ marginal tax rate.
Government Assistance
The government also
- Contributes $1,000 (tax-free) when a member first joins
- Pays annual member tax credit (for those 18 and over) of up to $521.43 (effective from 1 July 2011)
- Funds first home deposit subsidy through Housing NZ if the relevant criteria are met
Note: There is no Crown guarantee of KiwiSaver schemes or investment products of KiwiSaver schemes.
Employers must:
- Give new employees and other existing staff who are interested an Employee information pack (KS3)
- Pass employees’ details to Inland Revenue to enable them to be enrolled
- Deduct contributions from employees’ gross salary and pay these to IRD through the PAYE system
Tax facts supplied by CCH
