KiwiSaver changes on 1 April

The default contribution rate for both employers and employees will rise from 3% to 3.5% from 1 April.

The new rate will affect all pay days from 1 April. Even if your employee’s pay period covers days before and after 1 April, their whole contribution for that pay period will need to be deducted at the new rate.

Some of your employees may prefer to temporarily reduce their contribution rate. This could be because they can’t afford the rate increase or want to save in other ways.

They can apply for a temporary rate reduction in myIR, allowing them to continue contributing at 3%. 

As an employer, you will be able to match your employee’s temporary rate reduction.

However, when your employee moves to a higher contribution rate, you’ll need to increase your employer contributions to the default 3.5% rate, or whichever higher rate you choose. 

From 1 April, KiwiSaver members aged 16 and 17 will qualify for employer contributions, as long as they meet other eligibility criteria.

Remember to apply employer deductions for these employees from 1 April. 

• Check your payroll software or manual payroll documentation to make sure the 3.5% rate applies to all members on default rates for all pay days from 1 April. For your employees with a temporary rate reduction, make sure the 3% rate is applied.
• If you use payroll software, your provider is likely to automatically update the KiwiSaver rates. If you are in doubt, check with them.
• Talk to your bookkeeper or accountant to make sure you are ready for the changes.
• You may want to talk with your employees about the changes, especially those on default rates or aged 16 or 17.
• Review your wage budget to account for the higher employer contributions.