Employers play an important role in the KiwiSaver initiative by calculating employees' contributions, deducting the correct amount from their pay, and forwarding it to us.
Employees can choose a contribution rate of either 3%, 4% or 8% of their gross pay.
Gross pay means total salary or wages, including:
- extra salary gratuity
- overtime, and
- any other remuneration of any kind before tax e.g ACC or Paid Parental leave (PPL) payments .
- redundancy payments
- the value of any accommodation provided or payment of an accommodation allowance
- expenditure or allowances for accommodation and living costs overseas.
This means that compulsory employer contributions are not required for the excluded salary components.
The definition of gross salary or wages is different for contributions to complying funds as it is calculated on gross base salary or wages which excludes: bonuses, commissions, or other amounts not included in the employee's gross base salary or wages; if these are set out in the fund's trust deed.
If an employee does not select a rate on their KiwiSaver deduction form (KS2), make deductions at the default rate of 3%.
- make lump sum contributions through us or direct to their scheme provider
- change between the three contribution rates (3%, 4% or 8%) by advising you of their new contribution rate.
- change their contribution rate more frequently than every three months unless you agree.
Scheme providers may offer other services for members, such as life insurance. Payment for these services must go direct to the scheme provider, and cannot count towards the KiwiSaver contribution rate.
Employers are required to contribute the equivalent of 3% of their employee's gross salary or wages from 1 April 2013.
Employers were required to contribute the equivalent of:
- 1% of the employee's salary from 1 April 2008 to 31 March 2009
- 2% of the employee's salary from 1 April 2009 to 31 March 2013
Contributions made to existing superannuation schemes reduce the amount of compulsory employer contribution employers are required to pay if certain conditions are met.
If any of your employees are receiving the Job Support Scheme allowance, you will need to include these payments in the calculation as the scheme payments will be included as part of the employee’s gross income.
From 1 April 2012 all employer superannuation cash contributions (employer contributions) are liable for ESCT (employer superannuation contributions tax). The exception to this is if the employee and employer have agreed to treat some or all of the employer contribution as salary or wages under the PAYE rules.
KiwiSaver calculations tables are included in the PAYE deduction tables (IR340 and IR341) to help make it easier for you to work out how much to deduct. The PAYE calculator is also available and can be used to calculate members' KiwiSaver deductions. You need to make sure new employees' KiwiSaver contributions, net compulsory employer contributions and ESCT start from their first pay.
Special tax codes and student loan special deduction rates
Any KiwiSaver contributions that are or will be made from an employee's salary or wages must be in addition to their special tax code rate and student loan special deduction rate (if applicable). For example, if an employee is on a special tax code rate of 30% and they are making KiwiSaver contributions at 3%, total deductions from their salary or wages will be 33%.
Forward member deductions and net employer contributions to us along with your Employer monthly schedule (EMS) (IR348 and IR349). The EMS and Employer deductions form (IR345) include fields for KiwiSaver employee contributions, KiwiSaver employer contributions and ESCT. These forms can be filed online if you are registered to use our ir-File service. Please make sure you complete all fields on the form.
You can stop making deductions for an employee when they have elected to take a contribution holiday or when an employee gives you a Non-deduction notice (KS51).
Deductions from accident compensation payments
If you participate in the Accident Compensation Corporation's (ACC) Partnership Programme or have an ACC employer reimbursement agreement, you continue paying an employee after an accident. In this case, you must continue to deduct any KiwiSaver contributions that were applicable before the employee's accident.
To stop member contributions being deducted from their salary or wages, the employee must apply to us for a contributions holiday. If the employee continues to make contributions, you may choose to continue making employer contributions and deducting ESCT but you don't have to.
When ACC (and not you) pays the employee weekly compensation, you don't need to make member contributions from those payments unless the employee instructs ACC to make deductions. You also don't need to make compulsory employer contributions, although you may choose to make them.
Contributions made in error
Please let us know if you make an error in deducting contributions or making compulsory employer contributions from an employee's pay. If necessary, we'll refund any contributions made. If employer contributions and ESCT are included, these will be repaid to you.
You can amend KiwiSaver information the same way you make Employer monthly schedule amendments, by completing an Employer monthly schedule amendment (IR344) form. If you have a small number of amendments, call us on:
- 0800 377 772, or
- 04 978 0763 if calling by cellphone
and we'll update them over the phone.
Amendments to KiwiSaver information and resulting refunds will take longer to process if we have to request the refund from the member's scheme.
Shayne is a member of KiwiSaver. You accidentally deduct member contributions of 8% from his wages when his contribution rate is actually 4%.
$200 has been deducted from his wages to date, which you have sent to us but we haven't paid it yet to the KiwiSaver scheme provider. Shayne contacts us and we refund him the extra $100 that was deducted.
Rangi begins a new job and is on a contributions holiday. He has lost his contributions holiday notice so you must make deductions from his salary or wages until he shows you a replacement notice.
Rangi contacts us to get a replacement notice to stop deductions and asks us to refund the deductions made from his new job. We have already paid the deductions to Rangi's scheme provider, so we request them back and then make the refund to Rangi.
Resignation and retirement benefits
Make deductions as normal at 3%, 4% or 8% from the final payment of salary or wages made up for the employee. This means you must make deductions from any salary, wages or allowances you intend to pay, including all bonuses, commission, extra salary, gratuity, overtime pay, extra pay, or other remuneration of any kind.
KiwiSaver has some specific exclusions to the term "salary and wages" where you intend to make ongoing payment to the employee after they retire. One of these relates to periodic payments by way of pension, retiring allowance, superannuation or other allowance or annuity relating to the person's past employment.
To learn more about these exclusions, contact us.
There is a subsidy available to help cover your administration costs. The subsidy is set at $2 per employee per payday. It is payable to listed payroll intermediaries that carry out PAYE and related payroll functions for employers with up to five employees.
Find out more about
- Employees with special circumstances
- Employees exempt from automatic enrolment
- Compulsory employer contributions
Date published: 28 Mar 2013
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