KiwiSaver obligations for employers
As an employer you have responsibilities when it comes to KiwiSaver. It's important to stay on top of them, this guide is a good place to start.
What is KiwiSaver?
KiwiSaver is a work-based savings program designed to help New Zealanders save for their retirement. Employees put some of their salary or wages into a KiwiSaver account dedicated to their future. The government and employers may also contribute funds.
KiwiSaver is not compulsory for people starting a new job, but they will have to opt out rather than opt in if they don’t want to join.
Apart from using KiwiSaver savings to help get into a first home, there are limited ways KiwiSaver members may be able to access savings before they are eligible to make retirement withdrawals:
- Serious illness
- Significant financial hardship
- Permanently move to another country
To find out more, check out our guide on how to withdraw KiwiSaver savings early.
Employers' responsibilities
As an employer, you're the point person for administering KiwiSaver as part of your payroll management, including:
- Automatically enrolling any new eligible employees and act on opt-out requests.
- Providing information on KiwiSaver to your employee
- Providing information to Inland Revenue on your employee
- Deducting employee contributions when you do their payroll
- Making employer contributions when you do payroll
- Deducting the appropriate tax (Employer Superannuation Contribution Tax) from the employer contribution
- Sending all contributions and required information to Inland Revenue
Check the Inland Revenue website for a full list of your obligations.
Hiring someone new
When you hire a new person, sorting out KiwiSaver needs to be on your list of things to take care of, along with other payroll details.
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What if your new employee isn't already in KiwiSaver?
Within seven days of a new employee starting, you need to give non-members information on joining, or a way to opt-out if they don't want to stay in KiwiSaver, including:
- The Inland Revenue information sheet, "Your introduction to KiwiSaver - employee information" (KS3)
- The KiwiSaver Employee Details form (KS1)
- The KiwiSaver deduction form (KS2)
- An opt out request form (KS10)
If your employee doesn't want to give you some information, such as their age, it's not a problem. You must send Inland Revenue the KiwiSaver Employee Details form before the employee's first pay.
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What are employer contributions?
As an employer, you also contribute to eligible employee's KiwiSaver savings.
The minimum is 3% of their before-tax salary or wages. This amount is in addition to their salary or wages. All employers must pay this contribution, unless they are already contributing to a complying superannuation fund.
Some employers treat this employer contribution as part of the employee's total package when negotiating their pay.
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KiwiSaver preferences
For both members and non-members (who want to join), you need to advise Inland Revenue of their KiwiSaver preferences, using the KiwiSaver deduction form (KS2). This tells both you and Inland Revenue how much of their salary or wages they want to contribute to KiwiSaver. Keep a copy of this form for your records. If your employee doesn’t complete it, use the default contribution rate of 3%.
While waiting to hear back from Inland Revenue, you need to deduct KiwiSaver contributions from your employee’s pay at their nominated rate (3% if they didn’t select one), even if they’ve submitted a request to opt out or take a savings suspension.
This continues until Inland Revenue advises you that:
- An opt-out notice is in effect
- They have been granted a savings suspension
- You should stop making deductions
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Preferred KiwiSaver providers
KiwiSaver members can select and change providers whenever they choose. When they first join KiwiSaver, if they do not select a provider they will be allocated to one of the nine government appointed default providers.
As an employer you can select a preferred provider for your employees. This means that if they don't select a provider of their own, they will become a member with that provider. If you have a preferred provider you need to:
- Let your employee know you have preferred KiwiSaver provider
- Provide your employee with a Product Disclosure Statement (PDS) for that providers KiwiSaver scheme. A PDS helps new members understand the key information about the KiwiSaver scheme, such as fees and different investment options.
The benefit of having a preferred provider is you know where your employee will end up if they don't make a choice. Also the provider may offer additional services to your workplace, such as financial literacy workshops.
If you wish, you can select ASB KiwiSaver Scheme as your preferred KiwiSaver scheme.
Using payroll packages
Most online or cloud-based New Zealand-based payroll packages help you take care of all the KiwiSaver details. They also help with other complex areas, like holiday pay, student loan deductions and more.
Online payroll systems often charge a small fee per employee, rather than a big licensing fee upfront. Have a chat with your accountant or bookkeeper about a system that will be right for your business. They can save a lot of time and stress, and help avoid costly mistakes. You could also check out Xero's guide to running payroll.
For more information on KiwiSaver
KiwiSaver can be complex, and if you're not sure about something it's always best to check.
Inland Revenue has many resources on KiwiSaver for employers, and they're very helpful on the phone. Their employer enquiry number is 0800 377 772.
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This page is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and should not be relied on. This information has been prepared without considering your objectives, financial situation or needs. We recommend you seek independent professional advice and contact Inland Revenue before acting on this information.
Interests in the ASB KiwiSaver Scheme (Scheme) are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides Scheme administration and distribution services. No person guarantees interests in the Scheme. Interests in the Scheme are not deposits or other liabilities of ASB. They are subject to investment risk, including possible loss of income and principal invested. For more information see the ASB KiwiSaver Scheme Product Disclosure Statement available from this website and the register of offers of financial products at www.disclose-register.companiesoffice.govt.nz (search for ASB KiwiSaver Scheme).
