What do employers have to do under KiwiSaver?

by The FindLaw Team

Employers have a range of responsibilities under the KiwiSaver Act 2006. There are also tax implications, in terms of liability for employer’s superannuation contribution tax (ESCT).

For both new and existing employees, the employer must check that the employee is eligible to join KiwiSaver before deducting contributions from their pay.

New employees

When a new employee starts working for an employer, there are certain things the employer must do to comply with the KiwiSaver Act 2006.

1. Employers must provide employees with information

People who start a new job are automatically enrolled in KiwiSaver.
When a person begins new employment with an employer, the employer must give that person a copy of the KiwiSaver information pack for employees (KS3), which is supplied to employers by the IRD, within 7 days of the employee starting employment.

If the employer has chosen a KiwiSaver scheme, they must also supply the employee with an investment statement and a statement providing that, if the employee does not choose a scheme, the employee will be allocated to the employer’s chosen scheme (rather than the IRD’s default scheme).

2. Employers must provide IRD with information

New employees are required to give notice to the employer of their name and address, their IRD number, and whether or not they are already a member of a KiwiSaver scheme.

The employer must provide this information to the IRD (on form KS1) no later than the date of the next Employer Monthly Schedule (ie the 20th day of the following month).

If the new employee is already a member of KiwiSaver, they must provide their employer with a deduction notice (KS2) or a copy of the contributions holiday notice granted by the IRD.
If an employee who has been automatically enrolled in KiwiSaver gives their employer an opt-out form (KS10), the employer must pass this form on to the IRD with the next Employer Monthly Schedule.

3. Employers must make KiwiSaver deductions

The employer must make KiwiSaver deductions at the default rate of 3% of the new employee’s total salary or wages, unless the employee has given them notice that their contribution rate is 4% or 8%.

These deductions must be made from the first pay after the employee begins their employment.
KiwiSaver contributions deducted from an employee’s pay must be paid to the IRD along with PAYE. KiwiSaver deductions are included in the Employer Monthly Schedule.

4. Employers must cease KiwiSaver deductions

New employees who have been automatically enrolled because they were not already a member of KiwiSaver can choose to opt out of the scheme.

They can only opt out between their 14th and 56th day of employment. After this time, they must continue to be a member of KiwiSaver, unless they are granted a late opt-out by the IRD.
If an employer is notified that a new employee wishes to opt out, the employer must cease deductions. Notification will either be made by the employee submitting form KS10 to their employer, or by the IRD giving the employer an “opt out notice” for the employee (if the employee notifies the IRD directly).

If the employer receives form KS10 from an employee, they must cease deductions from the employee’s next pay, but only if it has been at least 2 weeks and less than 8 weeks since the employment began.

The KS10 form must be passed on to the IRD with the next Employer Monthly Schedule, if not before. The IRD will send a refund of contributions made to date to the employee (and the employer).

Employees may choose to take a “contributions holiday” after they have been in the scheme for at least a year. In this case, the employer must stop making KiwiSaver deductions from the employee’s pay and restart making them when the holiday ends or earlier if the employee asks to resume making contributions. A contributions holiday must be at least 3 months long and at most 5 years long, but can be shorter than 3 months if the employer agrees.

Employees who have reached the age where they can make withdrawals from KiwiSaver (usually when the person has reached superannuation age, unless they joined KiwiSaver less than five years before that date) can give their employer a “non-deduction” notice (KS51). The employer must then stop making deductions for the employee’s KiwiSaver contribution from their next pay.

5. Automatic enrolment does not apply to temporary workers

The automatic enrolment rules of KiwiSaver do not apply to temporary employment. For employers, this means that they do not have to provide these employees with a KiwiSaver information pack, notify the IRD of the employee’s details, or deduct KiwiSaver contributions from the employee’s pay.

“Temporary employment” is defined by section 12 of the KiwiSaver Act 2006 as meaning:

  • A casual agricultural worker (as defined by section YA1 of the Income Tax Act 2007); or
  • A contract of service for a period of 28 continuous days or less.

If an employee begins temporary employment, but then the employment continues beyond 28 days, the automatic enrolment rules will apply.

If an employee is employed on an “as and when required” basis, and does not have a specified end date for the employment, their employment period begins each time they are engaged by the employer and finishes each time that engagement ends. If each employment period is 28 days or less, then the automatic enrolment rules will not apply. However, as soon as they work continuously for the employer for more than 28 days, regardless of whether its one engagement or more, the automatic enrolment rules will apply.

A temporary employee who does not qualify for automatic enrolment can still choose to opt-in to KiwiSaver, either by giving their employer a deduction notice or contracting with a KiwiSaver scheme provider directly. If a KiwiSaver member who begins temporary employment requests an employer to make deductions, the employer will be obliged to do so and pay compulsory employer contributions for that employee.

Existing employees

There is no automatic enrolment for existing employees, but there is still a range of duties that employers must perform in relation to KiwiSaver.

1. Employers must provide employees with information

If an existing employee asks their employer for information on KiwiSaver, or if an existing employee gives their employer a KiwiSaver deduction notice (having opted-in), the employer must provide the employee with a KiwiSaver information pack for employees (KS3). In relation to employees who have opted in, the employer must provide them with the information pack within 7 days of receiving the deduction notice.

If the employer has chosen a KiwiSaver scheme, they must also supply the employee with an investment statement and a statement providing that if the employee does not choose a scheme, the employee will be allocated to the employer’s chosen scheme (rather than the IRD’s default scheme).

2. Employers must provide IRD with information

When an existing employee opts-in to KiwiSaver, the employer must provide the IRD (on form KS1) with the employee’s name, address and IRD number. The employer must also provide the IRD with the employee’s chosen contribution rate if the employee has given the employer a deduction notice.

The employer must provide this information to the IRD in their next Employer Monthly Schedule (ie the 20th day of the following month).

3. Employers must make KiwiSaver deductions

The employer must make KiwiSaver deductions from the employee’s next pay after they opt-in. The employee may give the employer a deduction notice, which will show whether they have chosen to contribute 3%, 4% or 8% of their salary or wages. If an employee has opted-in but has not given the employer a deduction notice, the employer must deduct KiwiSaver contributions at the default rate of 3% of the employee’s salary or wages.

KiwiSaver contributions deducted from an employee’s pay must be paid to the IRD along with PAYE. KiwiSaver deductions are included in the Employer Monthly Schedule.

4. Employers must cease KiwiSaver deductions

Employees may choose to take a “contributions holiday” after they have been in the scheme for at least a year or to stop their contributions if they have reached the age where they can make withdrawals from KiwiSaver.

If an employee gives the employer a contributions holiday request form (KS6) or a non-deduction form (KS51), the employer must stop making KiwiSaver deductions from the employee’s next pay.

5. Keeping records

Employers must keep records of which of their employees are KiwiSaver members, the contribution rate for each member, notifications of contribution holidays and copies of opt-out forms.

PAYE records will include deductions for KiwiSaver contributions. Records should be kept for at least 7 years after the employee has left the employment.

Pay slips should show KiwiSaver deductions and employer contributions.

Employer contributions

It is compulsory for employers to contribute to their employees’ KiwiSaver accounts. The compulsory (minimum) rate for employers’ contributions is currently 3% of the employee’s gross salary or wages.

Employers’ compulsory contributions must be paid in addition to an employee’s gross salary or wages (the default position). However, section 101B(4) of the KiwiSaver Act 2006 allows the parties to agree contractual terms and conditions that disregard this default position, but only if the terms and conditions “account for” the amount of the employer's compulsory contributions.

In Faitala v Terranova Homes & Care Ltd (2012), the Employment Court indicated this means the parties can incorporate the employer’s (identifiable) contribution as a component of, rather than a reduction to, the employee’s agreed rate of pay.

The Court also held that the statement in the parties' employment agreement: “The employee's remuneration is inclusive of any KiwiSaver compulsory employer contributions” was sufficient to “account for” the amount of the employer's compulsory contributions. While it would have been open to the parties to include reference to a numerical amount, that degree of specificity is not required by section 101B(4)(b).

Payment of the employer’s contributions must be accompanied by an Employer deductions form (IR345), and payment details must be included in the Employer Monthly Schedule. The IRD holds employer contributions until payment is cleared by the bank, after which they are passed on to the relevant KiwiSaver scheme provider.

Employers’ compulsory contributions to KiwiSaver are fully subject to employers’ superannuation contribution tax (ESCT).

Employer contributions to certain registered superannuation funds can be offset against the amount of any compulsory employer contributions. This is aimed at preventing employees from “double dipping” and employers having to contribute to two separate schemes. There are specific requirements that need to be met for an employer’s contribution to another scheme to count towards KiwiSaver. These are as follows:

  • The employer’s contributions are paid to a scheme that was registered before 17 May 2007;
  • The employer provided employees with access to that scheme before 17 May 2007;
  • The employee was employed by the employer:
    • before 1 April 2008; or
    • under a collective agreement that was in force before 17 May 2007, that expires after 1 April 2008, and that requires the employer to contribute to an existing superannuation scheme;
  • The employer’s contributions to the scheme vest in the employee within 5 years; and
  • The contributions are specified superannuation contributions.


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