KiwiSaver

The Government introduced KiwiSaver in 2007 as a voluntary initiative that encourages participants to save a portion of each pay packet for retirement in an approved private investment scheme.

KiwiSaver can be used by the self-employed, but it is primarily used by employees who have their contributions to their chosen KiwiSaver scheme deducted from their pay for them by their employers.

At the same time, the employer also adds their own compulsory employer contributions to the investment scheme.

Every month, the employer forwards both the employee’s contribution and their own to  Inland Revenue when they complete their PAYE (pay as you earn) returns and EMS (Employer Monthly Schedule). Inland Revenue then forwards the funds to the employee’s chosen KiwiSaver scheme provider.

On this page:

• How does KiwiSaver work?
• What are your responsibilities?
• How do I enrol an employee in KiwiSaver?
• How do I calculate and process KiwiSaver contributions?
• How do I handle employee opt-out requests?
• What is a contributions holiday?
• Penalties and disputes
• Record keeping
• What if I already offer an existing superannuation scheme?

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How does KiwiSaver work?

KiwiSaver is a workplace superannuation scheme that helps your employees save for their futures by investing money in one of a number of approved private investment schemes.

As an incentive to join, the government contributes a tax-free $1000 kick-start payment to each KiwiSaver member fund and offers a KiwiSaver member tax credit.

Some employers have chosen their own workplace KiwiSaver scheme for their employees to join. All new employees will be signed up to that scheme unless they nominate a scheme of their own choice.

Find out more about approved KiwiSaver schemes.

Once your employee is a KiwiSaver member, it is then up to you to make deductions from their pay and send them to Inland Revenue, with your own compulsory employer contributions.

Your employees can then access the funds once they turn 65 so long as they have been a KiwiSaver member for at least five years. In some circumstances, your employees could access the funds sooner by making an application to the scheme provider.

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What are your responsibilities?

As an employer your main KiwiSaver responsibilities include the following.

Enrolment

• Checking if employees are eligible to join KiwiSaver.
• Checking if employees should be automatically enrolled in KiwiSaver.
• Making sure employees can make informed choices by:
  
  • Giving them a KiwiSaver employee information pack (KS3).
  • Giving them notification in writing of any KiwiSaver investment scheme your business offers, plus an investment statement for that scheme.
• Enrolling existing employees who are eligible and wish to opt in.
• Automatically enrolling eligible new employees.

Administration

• Deducting KiwiSaver employee contributions.
• Making compulsory employer contributions.
• Forwarding both to Inland Revenue by the due date when making PAYE payments.
• Acting on opt-out and contributions holiday requests from employees.
• Stopping or starting deductions when Inland Revenue advise you to.
• Contacting Inland Revenue when you require more KiwiSaver employee information packs (KS3).

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How do I enrol an employee in KiwiSaver?

If they’re eligible, your employees can join KiwiSaver in one of three ways:

• As a new employee they automatically enrol in KiwiSaver.
• As an existing employee who chooses to opt into KiwiSaver.
• As an existing employee who chooses to opt into KiwiSaver directly through a KiwiSaver investment scheme provider.

Eligibility

You must first check whether an employee meets the eligibility criteria to join KiwiSaver. To be eligible for KiwiSaver, an employee must be:

• Between 18 and 65, and
• A New Zealand citizen or entitled, under the Immigration Act 1987, to be in New Zealand indefinitely (including Australian citizens and people who hold either a New Zealand or Australian residence permit), and
• Primarily living in New Zealand.

Find out what the definition of an employee is in Focus on employees.

Enrolment

You must automatically enrol all new employees with KiwiSaver if they are eligible. If an existing employee is eligible for KiwiSaver, you must make sure they are aware of their KiwiSaver entitlements and register them if they wish to opt in.

New employees

1. Check if they are eligible to join KiwiSaver (see criteria above).
2. If the new employee is eligible, make sure they’re fully informed by giving them the KiwiSaver employee information pack (KS3).
3. Inform the employee in writing of any KiwiSaver scheme your business offers its employees, and provide an investment statement for that scheme, so they can make an informed choice. Unless the employee chooses an alternative they need to be automatically enrolled in this scheme.
4. Check if they must be automatically enrolled. Generally, if the following applies, you need to automatically enrol them in KiwiSaver.
   

   However, in a small amount of cases, there are employee exemptions that mean they might not have to be automatically enrolled.

   • They are between 18 and 65, and
   • They aren’t already a member of KiwiSaver, and
   • They are either living in New Zealand or entitled to live here indefinitely, and
   • You’re not an exempt employer. An exempt employer is one who offers its own work place scheme to all of the employer’s permanent employees.

5. If the new employee needs to be automatically enrolled or chooses to opt in, have them complete the KiwiSaver deduction form (KS2) and return it to you. This form lets the employee choose between having 3%, 4% or 8% of their salary or wage deducted as KiwiSaver employee contributions.

   If they don’t fill this out, make the standard 3% deduction when it comes to processing contributions.

   A new employee who is already a KiwiSaver member should give you a completed KS2 form and you should deduct KiwiSaver employee contributions from their salary or wage at the rate they’ve nominated.

6. Register for the Inland Revenue ir-File secure online service and use it to enrol the employee in KiwiSaver:

   • File the employee’s details before the due date of your next Employer Monthly Schedule (EMS).

   • Full names, addresses and  IRD numbers are required from each employee taking part, but you’re only required to give Inland Revenue the information the employee chooses to give you.

   • You will not be penalised for not giving Inland Revenue extra information withheld by the employee for their own reasons.

   You can manually enrol the employee by sending a completed KiwiSaver employee details form (KS1) to Inland Revenue, but it’s much easier to use ir-File.

   Click on Lesson 3 from these ir-File demonstrations to find out why.

Existing employees

1. Make sure all eligible existing employees are aware of their KiwiSaver entitlements by giving them a KiwiSaver employee information pack (KS3).

   If an employee asks for advice on KiwiSaver, you must provide them with the information pack within seven days of them asking.

2. Inform the employee of your chosen KiwiSaver investment scheme provider in writing – if your business has one – and provide them with the scheme’s investment statement so they can make an informed choice.

3. If they choose to opt in, have the employee fill out the KiwiSaver deduction form (KS2). This form lets them choose between having 3%, 4% or 8% of their salary or wage deducted as KiwiSaver employee contributions.

   If they don’t fill this out, make the standard 3% deduction when it comes to processing contributions.

4. Register for the Inland Revenue ir-File secure online service and use it to enrol the existing employee in KiwiSaver, in the same way as outlined above under point 6 of “New employees”.

Inland Revenue

You may be contacted in writing by Inland Revenue to start deducting KiwiSaver contributions from an employee’s salary or wage if:

• The employee has arranged KiwiSaver membership directly through a KiwiSaver investment scheme provider.
• The employee’s pre-approved contributions holiday with Inland Revenue comes to an end.

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How do I calculate and process KiwiSaver contributions?

As an employer, you’re required to process two types of KiwiSaver contributions for your employees. They are:

1. Employee (or member) contributions you deduct from the employee’s wage or salary. The amount is chosen by the employee as 3%, 4% or 8% of their pay. If they fail to make a choice, deductions should be 3%.
2. Compulsory employer contributions, which are currently set at a minimum of 3% of the employee’s pay. You pay ESCT (Employer Superannuation Contribution Tax) on each contribution you make. Find out more about ESCT with our Overview of tax and levies.

KiwiSaver is incorporated into the PAYE and EMS filing systems used by all salary and wage-paying employers, so the easiest way to process these contributions is by using the Inland Revenue ir-File secure online service.

Your employees’ details are saved in the system after the first time you input them, while the contributions are automatically calculated for you. You can also forward your deductions directly to Inland Revenue using the same system.

If you don’t already outsource your payroll to an accounting firm, using ir-File will save you a lot of time and hassle each pay cycle.

If you discover you’ve made an error after filing your EMS you can correct it by filing an IR344 amendment form.

Click on Lesson 1 from these ir-File demonstrations to find out how.

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How do I handle employee opt-out requests?

All new employees have eight weeks to opt out of KiwiSaver once they are automatically enrolled. After eight weeks, any opt out requests made by the employee are accepted or rejected at the discretion of Inland Revenue.

If an employee informs you that they want to opt-out, have them fill out a New employee opt-out request (KS10) form.

Some new employees may intend to opt out at their first opportunity (after 14 days), but if they’re eligible for KiwiSaver, you still need to automatically enrol them. Once that process is complete, you can then have them fill out a KS10 form.

If a KiwiSaver-registered employee does this within the first eight weeks of employment (i.e., between the 14th and 56th day since they started working for you) you must then do the following.

• Stop making KiwiSaver employee deductions and employer contributions, and
• Send Inland Revenue the KS10, or a copy of it, or file it online using ir-File before the due date of your next EMS.

You can refund the employee their KiwiSaver deductions if you haven’t already forwarded the funds to Inland Revenue. However, if this doesn’t take place, Inland Revenue will refund the employee directly.

Employees can also fill out a KS10 online at Inland Revenue’s website or send Inland Revenue the completed form directly. In both cases, Inland Revenue will inform you to stop making deductions and contributions.

A KS10 takes effect from the date you or Inland Revenue receive it from the employee. You can then request Inland Revenue to refund the KiwiSaver compulsory employer contributions and any ESCT you have paid on those contributions up to that date.

You can do this either by filling out an Employer monthly schedule amendments (IR344) form or calling Inland Revenue on 0800 377 772, or 04 978 0763 if calling from a mobile phone.

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What is a contributions holiday?

KiwiSaver members can apply to stop having funds deducted from their pay for their KiwiSaver scheme for a period of between three months and five years. This is called a contributions holiday and is only available to your employees after their first year on KiwiSaver (unless hardship applies).

To request a contributions holiday, an employee has to fill out a Contributions holiday request (KS6) form and send it to Inland Revenue.

Find out more about contributions holidays with Inland Revenue.

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Penalties and disputes

Inland Revenue is committed to helping employers meet their KiwiSaver obligations, but if you fail to do so – by not making compulsory employer contributions, for example – you could face a penalty.

Find out more about KiwiSaver penalties and disputes with Inland Revenue.

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Record keeping

You must keep a record of the following KiwiSaver employee details for a minimum of seven years:

• The employee’s contribution rate.
• The amounts you’ve deducted (shown in PAYE records).
• Any contribution holidays or opt-out request notifications.
• Your compulsory and voluntary employer contributions.
• The amount of ESCT deducted from your employer contributions.

Many of these details should be found either in PAYE records or on employee pay slips.

Find out more about your record keeping obligations with Inland Revenue.

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What if I already offer an existing superannuation scheme?

Find out about existing superannuation scheme options with Inland Revenue. You can also seek assistance from the Financial Markets Authority, which regulates KiwiSaver investment schemes:

• Call 0800 434 566
• Go online to the Financial Markets Authority website.

Find out more about Employment regulations, Recruiting staff, Employer ACC levies and Managing staff.