Member contributions start from the first pay day after commencement of employment, if the employee has not opted out prior to that first pay date.
Member contributions are automatically deducted from salary/wages and must be sent to Inland Revenue.
Default member contribution rate is currently 3% of employee's gross salary or wages, unless an optional higher rate of either 4 or 8% is selected by the employee. The Government signaled in its May 2011 Budget that if a National Party led government remains in power after the 2011 election, then the minimum regular contribution for members will increase to 3% of gross wage or salary from 1 April 2013. Base salary or wages is used to calculate the contribution if made to a complying fund.
Member contribution holidays are allowed by the member applying to the Inland Revenue after an individual has been making contributions for at least 12 months. Contribution holidays within 12 months are also possible in cases of financial hardship. A contribution holiday must be for a minimum period of 3 months (unless the employer agrees to a shorter period) and can be for up to five years at a time (although contribution holidays for financial hardship have a 3 month period unless Inland Revenue agree otherwise).
Until 31 May 2009, members could divert up to half of their member contributions (but not any tax credit contributions) to repay the mortgage on their home, if their mortgagee and scheme provider agree. This facility was cancelled on 1 June 2009.
Inland Revenue will forward contributions to the scheme provider together with any interest earned whilst the contributions were held by Inland Revenue.
An employee who is under age 18 is not automatically enrolled. If, however, they have opted into a KiwiSaver scheme (either by a parent/guardian or directly) they are obliged to contribute if they are an employee. The usual contribution holiday rules apply.