Working with employers
KiwiSaver is a work-based savings initiative and most employers are required to offer KiwiSaver in their workplace.
Because Inland Revenue administers the collection of member, compulsory and voluntary employer contributions, your contact with employers will be less than is currently required for administering work-based superannuation schemes.
Some activities may require more interaction between you and employers.
Administration
There may be occasions when you have to contact a member's employer. You should be aware that the employer may be dealing with multiple schemes and will not necessarily have any knowledge of your particular scheme, your requirements, or scheme rules.
Most member information will be collected from the employer by Inland Revenue and passed onto your scheme. You may receive information directly from the member.
Employer contributions
From 1 April 2009 employers will be required to contribute to their employee’s KiwiSaver account or complying fund at 2% of their gross salary or wage. Contributions they make to existing superannuation schemes count as compulsory employer contributions (if certain conditions are met).
Compulsory employer contributions must vest in the employee within 5 years.
The minimum compulsory contribution rate for employers is 2% from 1 April 2009. Employers can make additional voluntary contributions if they wish. Additional voluntary contributions over the compulsory contribution rate of 2% are subject to the employer superannuation contribution tax (ESCT). Voluntary contributions also include contributions made to employees aged under 18 or over 65 (and who have been a member for more than five years) and contributions made to employees on a contribution holiday - these contributions are also liable for ESCT. Employer contributions to KiwiSaver schemes must be paid through Inland Revenue. Employer contributions to complying funds are made direct to the scheme provider.
Unlike employee contributions (of up to 8% of the employee's before-tax pay), employer contributions (and other one-off contributions) are not guaranteed by the Crown
Employer-chosen schemes
Employers can choose to have a KiwiSaver scheme for their employees to join. This means that employees who don't choose their own savings scheme will be allocated to the employer's chosen provider, instead of to a default scheme allocated by Inland Revenue.
An employer may choose a preferred KiwiSaver scheme for their employees, only if the scheme is open to all employees. You must accept all enrolments of permanent employees who meet the KiwiSaver eligibility criteria.
If an employer chooses a scheme for their employees, the employer needs to advise Inland Revenue of the details of the chosen scheme, and give employees a copy of the investment statement and the KiwiSaver information pack.
If you are selected as an employer's chosen scheme you will need to have closer contact with that employer. You will also need to ensure they have a supply of your scheme's investment statements and prospectus.
The Government Actuary may require you to have a participation agreement. For more information see the Insurance and Superannuation Unit website.
Employers exempt from automatic enrolment
An employer with an existing registered superannuation scheme can apply to the Government Actuary to be exempt from KiwiSaver's automatic enrolment rules, if that scheme meets certain criteria.
You should be aware that employees of an exempt employer can still opt in to KiwiSaver in the same way as other people.
Giving financial advice
We advise employers to encourage their employees to seek advice from a professional financial advisor.
Employers act as a conduit, passing on information about KiwiSaver to employees, or choosing a KiwiSaver scheme for employees who don't choose their own. These activities do not make employers liable as promoters or investment providers under the investment advisers and securities legislation.
Date published: 24 Mar 2009
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