KiwiSaver: The Good Bosses' Guide

KiwiSaver is between the government and your employees, but as the employer, you're the middleman. You have a few essential KiwiSaver responsibilities for everyone you employ.

Joining In

KiwiSaver may be voluntary, but it's opt-out, not opt-in. All new recruits should be automatically enrolled in KiwiSaver, and you should take deductions from their very first pay. They can choose to remove themselves after 2 weeks, but if they don’t opt out before 8 weeks in their new job, they're contributing permanently.

Making Contributions

Employees can choose to allocate 3%, 4%, 6%, 8% or 10% of their income to KiwiSaver. They can't choose something in between like 5% or 7%. There are 5 options, and 5 only. (If that sounds a bit funny, it's probably because there were originally only 3 options, and the 6% and 10% contribution rates were added later).

As the employer, you have to kick in the minimum of 3%. If you're the generous type, you can contribute any percentage over that. In fact, there are no restrictions on the employer’s contribution.

Making Sacrifices

The employer contribution can be reduced from the employee’s pay. This is called a “salary sacrifice”. The employee’s salary is reduced by 3%, the amount the employer has to pay as their minimum KiwiSaver contribution. This means that in the eyes of the government, the employer is contributing, when in fact the employee is basically just paying 6%. This has to be written into the employment agreement, and can't be decided after the employee starts or the contract is signed. This might help you save a few bucks, but probably isn't the best way to attract and keep good people. And bear in mind that you can’t pay the employee less than the minimum wage, as a result of the 3% reduction.

Making Exceptions

Okay, so we did say that all new employees must be enrolled. This is almost always the case, but of course there are some exceptions. Employees under 18 years old, short-term temporary workers and certain casual employees don’t have to be in the KiwiSaver scheme. In some cases they might have already enrolled, so don’t just assume they're not contributing. Check out the full list of exemptions here. It's a long list, but most of the categories are pretty unusual stuff. There's also been a big change to this - people over 65 years old can now also be enrolled in KiwiSaver, and won't be "locked in" for 5 years anymore.

Keeping Records

Employees who don't want to join should fill in the KS10 form (opt-out). They can do this online and send it straight off to IR. Anyone contributing to KiwiSaver should also fill in a KS2. This doesn’t go to IR, but you’ll want to keep a copy of it with your employee’s other stuff. It’s the only form that confirms what rate they’ve chosen to contribute. This protects you later on if an employee thinks you’ve deducted the wrong percentage. If anybody asks to change their contribution rate, they should fill in a new KS2 form.

Onboarding is the most important time for putting KiwiSaver in place, so make it part of your standard welcome process, set and forget.

Wanna know more about KiwiSaver? Check out more details and FAQs over at the official KiwiSaver website www.kiwisaver.govt.nz.

Wanna know more about the early stages of employment? Check out our guide to an employee's first day or how payroll software works.