KiwiSaver changes for members

From 1 April 2009

What has been changed?

• The minimum employee contribution is now 2% of your gross pay. You can choose to contribute either 2%, 4% or 8% of your gross pay to KiwiSaver. This means that you can reduce your contribution to the minimum, but this may affect the amount of member tax credit you receive.
• The $40 annual fee subsidy has been removed.
• The compulsory employer contribution is now 2%. Your employer will have increased their contribution to 2%. This won't increase in future years.
• The KiwiSaver Act has been amended and the Employment Relations Act amendment relating to KiwiSaver has been repealed. This means that KiwiSaver employer contributions must be paid in addition to your gross salary and wages, unless you've agreed otherwise with your employer, through good faith bargaining.

Reducing the minimum contribution to 2%

If you're already a member of KiwiSaver you can reduce the amount you contribute from your pay to 2%

If you want to reduce your contribution, you'll need to let your employer know in writing. Either complete a new KiwiSaver deduction form (KS2) or write to your employer.

If you're a new member

If you're a new member and you don't tell your employer how much you want deducted from your pay, we'll assume you want to contribute 2%.

Reducing your contribution to 2% may affect the amount of member tax credit you receive

If you're eligible, the Government will pay into your KiwiSaver scheme an annual member tax credit matching your contributions up to $1,042.86 a year (this works out to about $20 a week).

If you reduce your contribution to 2% of your gross pay, you might not contribute enough to your KiwiSaver scheme to receive the maximum member tax credit.

Making voluntary contributions so that you qualify for the member tax credit

You can make voluntary contributions to your KiwiSaver account so that your contributions total $1,042.86 each year.

If your income is...	then your annual contribution at...	and the voluntary contribution to reach $1042.86 is...
$15,000	4% is $600	$442.86
	2% is $300	$742.86
$26,000	4% is $1,040	$2.86
	2% is $520	$522.86
$35,000	4% is $1,400	$0
	2% is $700	$341.86
$45,000	4% is $1,800	$0
	2% is $900	$142.86
$52,000	4% is $2,080	$0
	2% is $1,040	$2.86

Removal of the $40 annual fee subsidy

This subsidy was paid by the Government to help you cover the cost of fees charged by your scheme provider.

To find out more about the fees charged to your KiwiSaver account, you can:

• check directly with your scheme provider
• seek independent financial advice
• check out the KiwiSaver fees calculator on the Retirement Commission's Sorted website
• keep track of your KiwiSaver scheme by:
  • registering for Manage my KiwiSaver, or
  • visiting the website of your scheme provider.

Your employer will have increased their contribution to 2% which won't increase in future years

If your employer makes voluntary contributions to your KiwiSaver account they'll have to pay tax on the voluntary portion. This means there may be less money going in to your KiwiSaver account.

Voluntary employer contributions include any contributions:

• over and above the compulsory employer contribution rate
• to employees aged under 18 or over 65 years old (and who have been a member for more than five years)
• to employees on a contribution holiday, or
• to employees who are on leave without pay.

Need more information?