The Role of Employers

The role of an employer in relation to KiwiSaver for their employees is to:

• Hand out the Inland Revenue information pack to new employees whom the automatic enrollment rules apply to post 1 July 2007; to employees who wish to opt in, and to employees who ask for one.   

• Select a "chosen scheme" (for those employees who do not choose their own scheme provider) if the employer wishes to and provide a copy of that scheme's investment statement to employees with the Inland Revenue information pack.   

• Make KiwiSaver deductions from salary/wages (from the first pay after employment begins) for new employees that the automatic enrollment rules apply to, unless the employee has opted out or has opted to take a contribution holiday.   

• Administer opt-out elections for employees who choose to do that (employees can also opt-out by advising Inland Revenue), refund any contributions that have not already been sent on the Inland Revenue and notify Inland Revenue of the opt-out.   

• Make deductions for other employees who opt in.   

• Pay the contributions deducted to Inland Revenue with your PAYE.   

• Make employer contributions if they wish to; contributions of up to 4% of gross salary / wages (but with a maximum of the amount the employee contributes directly) will be exempt from SSCWT.   

From 1 April 2008, all employees contributing to KiwiSaver (and complying superannuation funds) will also be entitled to a matching employer contribution, subject to any offsets for employer contributions to other superannuation arrangements that may be available.  The compulsory employer contribution will be:

To minimise the impact of compulsory matching employer contributions, the government has allowed employer contributions to all non-KiwiSaver workplace retirement savings schemes to count towards compulsory contributions for an employee where:

1. The scheme (or the prior scheme if the scheme is a successor scheme) was registered before 17 May 2007;
2. The scheme provides access to eligible employees before 17 May 2007;
3. The employee is employed by the employer before 1 April 2008 and the employer makes or has agreed to make the employer contributions before that date, or employee is covered by a collective agreement that is in force before 17 May 2007 and expires after 1 April 2008 requiring employer contributions to the registered superannuation scheme; and
4. The registered superannuation scheme provides that the contribution vests in the employee within five years of becoming a member.

The KiwiSaver Act also allows employees to enter into a transition agreement with their employers that the employer will contribute at least 2% towards the employee's 4% minimum contribution rate, from 1 April 2008 until 31 March 2011, if:

1. The employer and the employee afree that they will use the transition rates of contribution;
2. The employer contribution for the payment of salary or wages is equal to or greater than the relevant transition rate for the employee; and
3. The employer contribution vests in the employee immediately after it is made.

The minimum contribution rate for employees whose employer agrees to contribute towards their contribution rate will be: