KiwiSaver for your employees (How KiwiSaver affects your employees)

KiwiSaver members can choose to contribute 4% or 8% of their gross salary or wages (that means total salary, including bonuses, commission, extra salary and overtime). If your employee doesn't complete the KiwiSaver deduction form (KS2), deductions will be at the default rate of 4%. Members can also switch between savings rates.

If your employee wants to and you agree, you can choose to split the minimum contribution. This means to begin with you would both put in at least 2% a year. The amount you must contribute will increase in 2010 to 3% and reach a minimum of 4% in 2011, including your compulsory employer contribution.

Members can make one-off lump sum payments any time, through their scheme provider or Inland Revenue.

When KiwiSaver deductions start

You should start KiwiSaver deductions from eligible employees' first pay. If they later decide to opt out you will need to act on their opt-out form and pass it on to us.

If an employee opts out you may refund to them any contributions you still hold. If you have already passed the contributions on to us with your PAYE payments we will refund them directly to the employee. Any employer contributions will be refunded to you, less any employer tax credit you claim (from 1 April 2008).

Deductions for existing employees need to start on the first pay after they join KiwiSaver.

We will hold contributions deducted in the first three months while a new member is deciding which scheme to go for. The contributions are then paid, with interest, into their KiwiSaver account with their scheme provider.

Employer contributions

From 1 April 2008 you will be required to make a compulsory contribution to your employee's KiwiSaver account or complying fund at 1% of their gross salary or wage, rising to 4% in 2011. You'll also be eligible for an employer tax credit of up to $20 per member per week.

Temporary breaks from saving

Members who have been saving with KiwiSaver for 12 months can apply for a temporary break from saving, called a contributions holiday, of between three months and five years.

If a KiwiSaver member suffers financial hardship or serious illness within the first 12 months of contributing to KiwiSaver, they should talk to us as they may be eligible for an early contributions holiday.

We will send you a reminder before an employee on a savings break is due to start making contributions again. Contributions holidays are flexible and an employee may ask you to re-start deductions before their holiday period expires.

Find out more about contributions holidays.

Going on holiday

If one of your employees takes a holiday, overseas or in New Zealand, and continues to be paid by you, you should continue their KiwiSaver deductions unless they take a contributions holiday.

KiwiSaver

KiwiSaver for scheme providers

KiwiSaver for employers