Employer Obligations & Options

Effective 1 April 2013

The role of an employer is to comply with the KiwiSaver legislation.  The IR's employer guide KS4 goes into detail - in summary though:

  • Check whether new employees are eligible to join KiwiSaver;
  • Check whether new employees should be automatically enrolled;
  • Hand out the IR KiwiSaver employee information pack (KS3) to new employees who qualify for automatic enrollment;
  • Automatically enroll all new employees who are eligible.
  • Provide information (leaflet KS3) to existing employees who enquire about KiwiSaver.
  • Provide information to Inland Revenue on form KS1 about all new employees who are automatically enrolled, and eligible employees who have opted into KiwiSaver.
  • If you choose a preferred scheme, you will then need to provide new employees with a written statement, saying that you have chosen a scheme and that they will be allocated to it unless they chose their own, and a copy of that scheme's investment statement.
  • Deduct KiwiSaver member contributions from salary/wages (from the first pay after employment begins) for new employees that are automatically enrolled, or have opted in. The minimum member contribution is currently 3% (previously 2%). However, the employee can elect to contribute at a higher rate of either 4% or 8%. 
  • Administer opt-out elections for employees who choose to opt-out (employees can also opt-out by advising Inland Revenue). Refund any contributions deducted that have not already been sent on the Inland Revenue and notify Inland Revenue of the opt-out.
  • Make employer contributions. The employer contribution is capped at 3% of gross salary / wages. Employers may choose to make their employer contribution more than 3%.  Effective 1 April 2012 the full employer contribution must have ESCT deducted, and the employer must deduct ESCT at the individual KiwiSavers approcable progressive ESCT rate.  
  • Pay the contributions to Inland Revenue with your PAYE.
  • Stop & start deductions as directed by IR.

There are alternatives for employers that have an existing employer superannuation scheme or who wish to provide a superannuation scheme to complement KiwiSaver. Such employers tend to have employment strategies aimed at providing some flexibility around the age for retirement and at staff retention.  These options include:

  • Employers with an existing registered superannuation scheme can apply for an exemption, as an exempt employer, from the auto-enrolment provisions of KiwiSaver.  If an exemption is granted by the Financial Markets Authority, (see the earlier explanation of the term exempt employer) then new employees may join the employer's exempt scheme or KiwiSaver - or neither.  However, they will not be automatically enrolled in either.
  • Employers with an existing registered superannuation scheme can also apply to the Financial Markets Authority for approval as a complying fund (see the earlier explanation of the term complying fund).
  • An existing registered superannuation scheme can be continued, or a new scheme can be established, to complement KiwiSaver.  This can be offered to employees who;
    • may not want to join KiwiSaver; or
    • may wish to take advantage of Government incentives that are available to KiwiSaver members to the maximum extent and then to save additional amounts in a scheme with less restrictive access provisions.